Foreign Correspondence

[Amaunet]

China May Invest $12 Billion in Russia

09.21.2004, 08:21 AM
Update 1:
Prime minister Wen Jiabao will discuss possible Chinese plans to invest up to $12 billion in Russian energy industries during a visit to Moscow this week, a Hong Kong newspaper with close ties to Beijing said Tuesday.

The report came as energy-hungry China appealed to Moscow to see that oil giant Yukos meets commitments to Chinese customers, after the troubled Russian company suspended some exports.

During his three-day visit starting Thursday, Wen will discuss bilateral issues with Russian leaders, and Moscow's bid to enter the World Trade Organization, the Wen Wei Po newspaper said. It didn't give a source for the information.

"The two countries might also reach agreement that by 2020, China will invest $12 billion in Russia's energy resources and infrastructure," the newspaper said, without giving more details.

Chinese Foreign Ministry spokesman Kong Quan said he could not confirm the report.

"China and Russia will conduct cooperation in various areas, including energy, and the two sides will take active measures to expand cooperation - including the increase of investment," Kong said at a regular news briefing.

Wen's trip includes a meeting with Russian President Vladimir Putin and talks on anti-terrorism cooperation and other key issues, Chinese officials said.

"Energy cooperation takes an exceptionally important position" in China's relations with Russia, Assistant Foreign Minister Li Hui said last week.

The energy demands of China's booming economy are soaring, and state media say oil imports from Russia jumped 73 percent last year to 36.7 million barrels.

The two countries have been discussing a planned oil pipeline from Russia to China for more than a decade.

China was alarmed over the weekend when Yukos announced the suspension of oil exports by rail to state-owned China National Petroleum Corp. The Russian company blamed high shipping costs for the move, which affects exports of about 400,000 metric tons a month.

Foreign Ministry spokesman Kong appealed to Putin's government to see that Yukos's Chinese customers get their oil.

"We hope the Russian government can urge Yukos to fulfill its commitments," he said.

Dow Jones Newswires quoted a CNPC executive who accused Yukos of trying to pressure China to provide aid to the struggling Russian oil company.

A Yukos spokesman in Moscow said the reason behind the suspension was financial, not political. He said the last batch of Yukos crude is due to reach China on Sept. 28, though the company hopes to resume shipments. The spokesman didn't say when.

Analysts say Yukos might have timed its cancelation to coincide with Wen's visit.

In July, the two sides agreed to complete discussions on Russia's bid to join the WTO by the end of the year.

Russia first applied to join in 1993, but only started making major efforts to fulfill membership conditions when Putin came to power in 1999.

Each of the WTO's 147 existing members has the right to seek an individual deal with Russia as a condition of approving a new member, but only those with major trade ties are negotiating.

http://www.forbes.com/business/businesstech/feeds/ap/2004/09/21/ap1552912.html