Russian Fuel and Energy Minister Viktor Kalyuzhny led a Russian delegation to Beijing March 20 to discuss future Chinese-Russian energy cooperation. Representatives of seven Russian oil firms are participating in the meetings. Preliminary discussions indicate that such cooperation, while expensive and long-term, is feasible. Currently the Russian oil firm Yukos only has contracts to supply China with approximately 10 million barrels of crude over the next two years. But these small-scale links could soon balloon with two major petroleum projects in the works.

Such a multi-billion dollar deal would help cement a" TARGET="_new">http://www.stratfor.com/services/giu2000/030300a.ASP">a growing Chinese-Russian partnership and reduce the effects of a continued Chinese-Russian" TARGET="_new">http://www.stratfor.com/CIS/commentary/c0002090010.htm">Chinese-Russian rivalry. For Russia, these new pipelines would boost decaying Siberian economies.

The Tomsk-Beijing route would also undercut a competing proposal, a pipeline from western Kazakstan to Xinjiang, China. While having a similar capacity, this Kazak-Chinese pipeline is a much more ambitious – and at $3.5 billion, more expensive – project. Russia’s undercutting of the Kazak line serves to not only strengthen the Russian monopoly over export routes from the former Soviet Union, but ensures that the available funding is exclusively used for Russian projects. This leaves cash-starved Kazakstan exactly where Moscow wants it – totally dependent upon Russia for all of its significant export routes.

For China, the new lines would provide a secure land route for petroleum imports. Currently, China’s energy imports are shipped by sea and, if a conflict erupted, would be vulnerable to disruption. The pipelines would also secure a new supply to satisfy China’s growing" TARGET="_new">http://www.stratfor.com/SERVICES/giu2000/031000.ASP">growing energy needs. Beijing currently imports approximately 800,000 bpd, according to the U.S. Energy Intelligence Agency. The Tomsk-Beijing pipeline route alone would cover more than half of this amount.

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Neither of these deals is likely to be signed during the Beijing meetings; that should happen when acting Russian President Vladimir Putin makes his long-awaited trip to China after his election on March 26. Furthermore, Chinese and Russian negotiators have yet to nail down all of the details. China would prefer that the pipelines skirt around Mongolia in order to prevent third countries from levying transit fees or exercising control over China’s energy supplies. Russian suppliers are unsure if the Kovykta field alone will be able to supply the requisite amount of gas for the Irkutsk-Lianyunggang line.

  But the economics – and politics – of the deal indicate it will be sealed. Chinese-Russian cooperation – at least on the energy front – is moving from the ephemeral to the concrete.

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