Russia inks energy deal with China amid EU supply concerns

Moscow and Beijing vowed to expand energy ties with new pipelines to start pumping gas to China as early as 2011. The deal comes amid EU indecision on closer energy cooperation and growing competition from other gas consuming countries.

Russian President Valdimir Putin ended a two-day visit to Beijing with the signing of about 29 energy agreements and a promise to become China’s largest energy supplier within ten years.

The centrepiece was the signing of a memorandum of understanding between the China National Petroleum Corp (CNPC) and Gazprom to build two pipelines linking Russia’s Siberian gas fields to China. Both pipelines could be operational as early as 2011, according to a Russian government source quoted by RIA Novosti

But a possible future agreement on oil could not be agreed, Russia still hesitating on whether to build an eastern pipeline to Japan, causing frustration among Chinese officials.

In the meantime, the Sino-Russian gas deal is raising concerns among some European observers that Russia is trying to play major consuming nations against one another. Claude Mandil, executive director of the International Energy Agency, writes in today’s  Financial Times that Moscow “would be unable to meet its obligations to European consumers if it did not focus its investment spending on infrastructure in Russia”. Instead, Gazprom seems to invest in acquisitions in large customer countries, Mandil warns.

EU leaders are meeting on 23-24 March to decide on closer energy cooperation, including speaking with a single voice to major suppliers such as Russia. But EU countries at the same time expressed reluctance at giving away key elements of national sovereignty, notably on their choices of energy mix (EURACTIV, 15 March 2006).

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