China Secures Russian Oil

China has now secured one key source of oil and we can expect them to also secure long term supplies of LNG out of Canada’s west coast as well as alternative oils supplies there as needed. China has also secured significant supplies out of South America. All this relieves pressure on India to source oil as it can largely monopolize Persian Gulf supplies.

What is making all this so easy, is that USA internal production is increasing and allowing the USA to release suppliers to the international market. So it is still a scramble in terms of China but not in competition with anyone. In the meantime, both Canada and Russia will secure a major new market able to offset any weakness in their core markets.

All this is happening in a way that keeps OPEC powerless to set prices. The astonishing thing about all this activity is that it is happening so gently when it could easily have been in the midst of a crisis atmosphere. The only loser to be located anywhere is North Korea.

China inks $270 billion oil deal with Russia

By PTI | 22 Jun, 2013

http://economictimes.indiatimes.com/news/international-business/china-inks-270-billion-oil-deal-with-russia/articleshow/20716927.cms

BEIJING: China has signed a long-term agreement with Russia for oil deliveries with an estimated value of USD 270 billion over the next 25 years. 

The deal will see the supply of 365 million metric tonnes of oil to China starting from next month, state-run China Daily reported today. 

China's largest State-owned oil and gas producer, China National Petroleum Corporation (CNPC), and Russian oil giant Rosneft inked the agreement yesterday. 

Igor Sechin, the chief executive of state-controlled Rosneft, said deliveries could start as early as this year. 

The oil is likely to be delivered to China via the existing Eastern Siberia-Pacific Ocean oil pipeline that will pump direct into the Chinese region of Mohe in Heilongjiang province, the Daily report said. 

Officials from CNPC told the Daily that the deal had been in discussion for months, since Chinese President Xi Jinping visited Moscow and an agreement was signed in March. 

The source said the price of the deal had been a major sticking point between the two sides.

During his visit to Russia on Thursday, Vice-Premier Zhang Gaoli said that China was keen to work together with Russia to maximise the potential for bilateral economic cooperation. 

Russia has been looking for new markets for its energy exports because of shrinking demand in Europe, its traditional market, said Liao Na, the vice-president of energy consultancy ICIS C1 Energy. 

"The seller and the buyer both have strong willingness to reach the deal provided the price was comfortable for each of them.

"It is a good timing, considering current international oil prices," she said, adding that most institutions and commodity consultancies do not expect any dramatic oil price fluctuations. 

She said after the deal was finalised, Rosneft is scheduled to open a refinery in Tianjinin cooperation with a Chinese company in the second half of the year. 

In 2009, the two countries reached a framework agreement in which Russia would deliver about 70 billion cubic metres of natural gas to China annually for 30 years starting from 2014. 

China, the world's largest energy consumer, used 145 billion cubic metres of natural gas last year and will import 78.5 billion cubic metres of natural gas in 2014, according to data from ICISC1 Energy.

 

Liao said the two countries also have huge potential for cooperation in non-traditional energy sectors, and Russia may become the next major supplier of coal to China, the report said.