Rosneft and Transneft signed oil export agreements with China.

Loan talks with the Chinese Bank of Development successfully wrapped up this February, Rosneft and Transneft finally agreed on terms of oil deliveries to China. The oil company will sell raw oil to the transport monopoly and the latter will sell it in the Chinese market.

Rosneft will borrow $15 billion from China, Transneft $10 billion. In return, China will be receiving 15 million tons of oil every year for the next two decades. Branch of the East Siberia – Pacific Ocean oil pipeline will be built from Skovorodino, a township 67 kilometers from the Chinese border. Each partner will build the oil pipeline on its own territory. Cost of the Russian part of the structure is estimated at 10 billion rubles. Construction is to be completed by December 2010.

Bilateral agreement on oil export to China after 2011 was signed last week. Rosneft President Sergei Bogdanchikov had previously explained that his company would be selling oil to the monopoly and the latter to China. It is known as well that Rosneft will account for 9 million tons of oil to be delivered to China, Transneft for 6 million tons.

Commenting on the project to build a branch of the East Siberia – Pacific Ocean pipeline to China, Prime Minister Vladimir Putin announced that it would “… give us access to a stable and reliable market for oil from the East Siberian fields.”

A spokesman for Transneft said the document was to be forwarded to the parliament now and to the president after that. Ratification of the agreement is regarded as the date of beginning of construction, so that the first installment is expected right after that. (Rosneft in its turn expects the first installment before the end of September.)

Sources in the Russian-Chinese Commerce and Economic Cooperation Center meanwhile claim that the first installments were supposed to be transacted to the Russian companies’ bank accounts in the first days of April. Center Director Sergei Sanakoyev added that the government agreement was but a formality and that the process initially launched at the level of the governments on October 28 was already under way.

“As far as Rosneft is concerned, these agreements are a guarantee of a market for its oil. Considering the loans and tax privileges, it makes export by the East Siberia – Pacific Ocean pipeline quite lucrative a venture,” Dmitry Alexandrov of Financial Bridge investment company commented. “And as for Transneft, this loan from China is its chance to build the second East Siberia – Pacific Ocean pipeline.”