Economic News from Russia

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Gas Prices for China Tied to Oil Prices – Putin



Vladimir Putin pays official visit to People's Republic of China
© RIA Novosti. Alexei Druzhinin


16:15 21/05/2014


SHANGHAI, May 21 (RIA Novosti) – The price for gas under a deal signed Wednesday between Russian gas giant Gazprom and China’s CNPC is tied to the market price of oil and oil products and is satisfactory to both parties, Russian President Vladimir Putin said Wednesday.

Earlier in the day, Gazprom and CNPC signed the 30-year contract on the sale of Russian gas to China at a volume of 38 billion cubic meters per year via an eastern route.
The document was under discussion for several years with the main stumbling block being the gas price, which the parties finally agreed on at the last minute.

Gazprom CEO Alexei Miller declined to name the contract price for gas, saying it was a "commercial secret." He did, however, say that the cost of the entire contract was $400 billion, which if calculated against the total flows, comes to about $350 per 1,000 cubic meters.

In March 2013, Gazprom and CNPC signed a memorandum of understanding on the planned gas supplies to China along the eastern route via the Power of Siberia pipeline. Russian President Vladimir Putin’s current visit to China was the final stage of the negotiating process.

Miller has said the company could receive advance payment from China for the gas, which could start flowing as early as 2018. The planned project has an estimated capacity to pump up to 38 billion cubic meters annually, which could later increase to 60 billion cubic meters.

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the other deals people forgot


Key Russia-China deals
Published time: May 21, 2014 15:10
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May 21, 2014. President Vladimir Putin, left, and Chinese leader Xi Jinping during the signing of joint agreements in Shanghai. (RIA Novosti/Alexei Druzhinin)




Russia has secured more than 40 business contracts with China during President Putin’s visit to Shanghai. Top is the $400 billion gas contract, there are also deals in finance, investment, aircraft, and automobiles. Here is RT’s list of key agreements.


1. Russia's Gazprom and China's CNPC signed a historic gas deal worth $400 billion, which will provide the world's fastest growing economy with the natural gas it needs to expand over the next 30 years.


2. The Russian United Aircraft Corporation and China's Commercial Aircraft Corporation COMAC have confirmed plans to build a 400-seat, wide-body, long-range passenger aircraft, a potential rival to Boeing of the US, and Europe's Airbus. The new program aims to become one of the biggest large-scale international cooperation projects in both aviation and high-tech.


3. Russia’s biggest independent natural gas company NOVATEK signed a deal to supply China's CNPC with 3 million tons of liquefied natural gas annually for 20 years from their joint Yamal LNG project in the Russian north. The plans for the Yamal LNG project involve building a plant that can produce 16.5 million tons of LNG annually by 2020. It is slated to start production in 2017 with an initial output of 5.5 million tons of LNG per year.


4. Russia’s second biggest financial institution, VTB, signed a deal with Bank of China to bypass the dollar and pay each other in domestic currencies.


5. SIBUR, a leading Russian gas processing and petrochemicals company, signed a contract with China Petroleum and Chemical Corporation or Sinopec to establish a joint venture for the construction of a nitrile butadiene rubber (NBR) plant to produce 50,000 tonnes a year. Sinopec's share in the joint venture will be 74.9 percent and SIBUR's will be 25.1 percent.


6. Chinese auto maker Great Wall Motor Co. said it is planning to build a car plant in Russia’s Tula region, investing up to $521 million in the project capable of producing up to 150,000 vehicles a year.


7. Russia and China agreed to build the first cross-border rail bridge over the Amur River by 2016. The bridge will cut transportation times and increase trade.


8. Russia's Eurocement signed a number of contracts with companies within the Sinoma, CNBM and Sinomach Groups for the supply of equipment to new cement plants in six different regions of Russia (Leningrad, Ryazan, Bryansk, Arkhangelsk Ulyanovsk and Samara Region). The contracts are valued at more than $500 million.


9. Russia-China Investment Fund (RCIF) and Vcanland, a leading Chinese tourism developer, have agreed to invest $800 million in the development of tourism and social projects. The geographical focus will be on destinations such as Hainan Island, Lake Baikal, and the cities of Vladivostok and Sochi.


+ plus other secret economic deals that shouldnt be published in the media military etc.

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Russia's Rosneft May Buy Switzerland's Gunvor Energy Trader - Paper


Russia's Rosneft May Buy Switzerland's Gunvor Energy Trader - Paper
© RIA Novosti. Aleksey Nikolskiy


11:00 21/05/2014


MOSCOW, May 21 (RIA Novosti) — As the Swiss energy trader Gunvor prepares for sale, it holds talks with several potential buyers, including oil companies, and Russian giant Rosneft in particular, Russian daily Kommersant wrote on Wednesday citing market sources.



Gunvor assets were offered for sale in May, and some candidates are considering buying the entire company, the sources said. The discussed price is around $5 billion.


The sources, close to Gunvor's former partner Gennady Timchenko said the company was looking to attract partners, "and naturally, it is considering Rosneft."


Gunvor denied it was searching for buyers. Rosneft said it had no offers from the Swiss company. Sources in two other Russian energy companies Gazprom and LUKOIL said Gunvor was likely outside of their interest.


Founded by Timchenko and Swedish entrepreneur Torbjörn Törnqvist in 2000, Gunvor is one of the world’s largest oil traders and exports about 30 percent of Russia’s crude oil. The two businessmen owned 44 percent of the company until Timchenko sold his share to Törnqvist in March, just before the United States imposed sanctions on several Russian top public figures, including Timchenko.


The US Finance Ministry said Timchenko's activity in the energy sector was closely linked to President Vladimir Putin, who it said was a shareholder at Gunvor. The company denied Putin owned its shares.
After Timchenko left the company, Törnqvist announced he would be searching for a new partner. Kommersant sources say the Russian businessman, however, remains an influential figure in Gunvor's destiny, although the sale was irreversible.
"One way or another, he is informed about the sale talks," said one of the sources. Others deny Timchenko's involvement.
According to FT data, Gunvor made $92 billion in revenue in 2012.

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Gazprom to receive $25 billion prepayment for gas supplies to China

Economy
May 21, 18:20 UTC+4
Russia's Gazprom and China's CNPC have signed the 30-year contract for gas supplies worth $40 billion


Russia's president Vladimir Putin, Gazprom management committee chairman Alexei Miller and China National Petroleum Corporation (CNPC) chairman Zhou Jiping

© ITAR-TASS/Alexei Druzhinin





​MOSCOW, May 21. /ITAR-TASS/. Russian gas monopoly Gazprom will get $25 billion in prepayment from the Chinese National Petroleum Corporation (CNPC) to be allocated for the Sila Sibiri (Power of Siberia) pipeline under the gas supply deal, a source close to Gazprom told ITAR-TASS.The amount is similar to the earlier announced cost of the pipeline with an annual capacity of up to 38 billion cubic metres.
Construction would start as soon as the contract is signed, said Gazprom’s CEO Aleksey Miller. Gas should first be sold - this is the formula Gazprom had always stuck to, he said.

The companies signed the 30-year contract for gas supplies worth $40 billion to China via the eastern route pipeline on Wednesday.Miller described the deal as Gazprom’s so far major gas contract but declined to reveal the gas price referring to commercial confidentiality. The document granted the sides preferential tax regimes, he added.
Russian President Vladimir Putin told journalists in Shanghai works would start on the next day after the deal, as the sides would start to work on the western route for supplies from Western Siberia.
No strong growth in Gazprom stocks is to be expected over the short term as the contract with China had already been priced in. The gas holding’s stocks have already rocketed more than 20% from the local low of 122.8 rubles ($3.559 exchange rate fixed at May 21) per stock on April 28 to 149 rubles ($4.3) on Tuesday.

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