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UPDATE 2-Russia close to landmark oil and gas deals with China

Wed, 27th Feb 2013 14:37

* Russia's Deputy PM says China may give a loan to Rosneft

* Gazprom and China have been in gas talks for years

* Gazprom had planned to sell 68 bcm of gas to China peryear

* Russia pushing for closer energy ties with Asia

By Vladimir Soldatkin

MOSCOW, Feb 27 (Reuters) - Russian state-owned energycompanies Rosneft and Gazprom moved closerto landmark deals with China on Wednesday, urged by PresidentVladimir Putin to forge deeper ties with Asia's growing energymarkets.

Moscow has had bumpy relations with Beijing, including abrief conflict in 1960s over a small river islet, but theworld's largest energy producer and its largest consumer shareincreasingly similar views on global issues such as Syria.

Gazprom said it had agreed with China National PetroleumCorp to sign a deal by year-end to supply it with gas. Rosneft,a senior minister confirmed, is in talks with China for a majorloan, which would be secured by an increase in oil supplies.

Putin, who closely oversees Russia's big energy deals, hastold the state energy majors to look East as Europe seeks toreduce energy dependence on its former Cold War enemy.

Gazprom's gas exports to western Europe and Turkey fell by 7percent last year to 139 billion cubic metres as the euro zone'seconomic crisis sapped demand.

Russia, the world's top crude producer, pumps 300,000barrels per day of oil by pipeline to China. But Moscow has beenunable to secure a deal to pipe gas to China due mainly todifferences on price and on routes.

On Wednesday Gazprom, the world's largest gas company, set anew deadline for completing the talks - the end of this year.

"Gazprom and CNPC agreed to intensify the talks on Russiannatural gas supply via the eastern route with the aim of signinga purchase and sale contract by the end of 2013," Gazprom said.

China is trying to secure more sources of gas, includingfrom Turkmenistan, as its demand is expected to quadruple by2030.

Gazprom previously said that supplies from Russia could besplit, with 30 bcm per year coming from Gazprom's existingwestern Siberian fields and a further 38 bcm per year from itsfar eastern fields.

Its proposed Eastern route would include transport of gasvia a pipeline along the Pacific coast and shipment of LNG ontankers at sea. Gazprom plans to launch a gas liquefaction plantnear Vladivostok in 2018 with initial LNG output of 10-20million tonnes (up to 27 bcm) a year.

Gazprom said that it discussed the Vladivostok LNG projectwith CNPC, without elaborating.

Its share price rose in Moscow by 1 percent, outpacing aflat broader market.

ROSNEFT LOAN TALK

Rosneft, headed by Igor Sechen, Putin's long-standing ally,already supplies China with oil via a spur from the EasternSiberia-Pacific Ocean pipeline.

Industry sources have said that Rosneft is seeking to borrowfrom CNPC in return for possibly doubling oil supplies, whichwould make Beijing the top buyer of Russian oil and divertsupplies from Europe.

Deputy Prime Minister Arkady Dvorkovich said China may lendRosneft money to help finance a proposed increase in oilsupplies, news agency Interfax reported.

"It (a loan) is not ruled out. This was discussed by Rosneftand a Chinese bank," Dvorkovich, who is responsible for Russia'senergy sector, was quoted as saying by Interfax. Rosneftdeclined to comment.

Rosneft and Russian oil pipeline monopoly Transneft previously borrowed $25 billion from Beijing tofacilitate the acquisition of the assets of nationalised oilproducer Yukos and construction of the pipeline to China.

Rosneft has already raised a significant amount of debt tofinance a $55 billion acquisition of TNK-BP, a 50-50joint venture between BP and the AAR consortium ofSoviet-born tycoons.

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