Russia-China gas deal still under discussion

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Price negotiation and pipe construction for Russian natural gas supplies to China need more time before mega projects can be started, Russia's trade representative in China Sergey Tsyplakov said yesterday.

However, natural gas is not among the priorities for cooperation between the two countries in the year 2010, Tsyplakov said at a press conference yesterday.

Mechanical and electrical products, timber, ferrous metal and nonferrous metal, and investment cooperation are the four major areas for cooperation between the two countries this year, Tsyplakov said.

"The natural gas supply is still under discussion," Tsyplakov said. "The two sides are still negotiating prices before any major projects can be launched."

"The negotiation has lasted for years and there is unlikely to be a breakthrough in the near future," said Xu Tao, a scholar at the China Institutes of Contemporary International Relations. "The crux is the price."

The price China offers to Russia cannot compete with that offered by the EU, which is a big buyer of Russia's natural gas and on top of Russia's supply list, Xu said.

"Natural gas supply remains an option for the two countries to seek cooperation, but other problems such as the construction of gas pipes still takes more time," Xu said.

According to Xinhua News Agency, Russia and China are likely to reach an agreement on Russian natural gas supplies to China in mid-2011 and Russia would start to deliver gas to China via the West Siberia pipeline in 2015.

Bilateral trade between China and Russia declined by 32 percent last year, which is mainly because of the reduced investment and consumer demand in Russia, which suffered from the global financial crisis, Tsyplakov said.

Russia's economy will keep recovering and increasing in the next two years and it is predicted the bilateral trade volume will recover to the level before the financial crisis as early as the end of 2011 or the beginning of 2012, Tsyplakov said.

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