China, Russia ink S$105 billion oil supply deal

BEIJING — Russia has signed an US$85 billion (S$105 billion) deal to supply oil to China, visiting Prime Minister Dmitry Medvedev said yesterday.

His announcements suggested the giant neighbours might be committed to speeding up an expansion of energy trade that has been slowed by lack of agreement on prices and other details.

The two governments also agreed to jointly construct an oil refinery in Tianjin, east of Beijing, Mr Medvedev said in comments posted on the website of China’s official Xinhua news agency. Xinhua said he made them during an online forum with Internet users.

Mr Medvedev said Russia’s biggest oil producer, Rosneft, will supply China with 70 million more barrels of crude a year for 10 years under the latest agreement, according to Xinhua.

United States government data show that China overtook the US in September as the world’s biggest oil importer.

China is eager to obtain Russian supplies, which would help to curb its reliance on crude from the unstable Persian Gulf, which Beijing sees as a potential security weakness.

The Tianjin refinery will have an annual capacity of 110 million barrels, Mr Medvedev said, according to Xinhua. It will be built by state-owned China National Petroleum Corp, which will own 49 per cent, and Rosneft, which will own 51 per cent.

In June, the two firms signed an agreement for Russia to supply 2.5 billion barrels of oil valued at an estimated US$270 billion to China over the next 25 years. AP