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Russia says close to final stage on China gas deal

China's Premier Wen gestures next to Russia's Prime Minister Putin during a welcome ceremony at the Great Hall of the People in Beijing
China's Premier Wen gestures next to Russia's Prime Minister Putin during a welcome ceremony at the Great Hall of the People in Beijing

By Gleb Bryanski

BEIJING (Reuters) - Russia said Tuesday it was close to the final stage of a huge gas supply deal with China, in what would be a landmark trade agreement between the long-wary neighbors.

A deal to supply the world's second biggest economy with up to 68 billion cubic meters of Russian gas a year over 30 years has long been delayed over pricing disagreements.

"We are nearing the final stage of work on gas supplies," Putin said during a visit to Beijing," said Russian Prime Minister Vladimir Putin, on his first overseas trip since announcing he was ready to reclaim the Russian presidency.

Putin is hoping his two-day visit will help broaden trade with China, which he expects to grow to $200 billion in 2020 from $59.3 billion last year.

Earlier, his Deputy Prime Minister Igor Sechin said that there had been "significant" progress in the gas talks with Chinese Vice Premier Wang Qishan.

A senior Russian official had said before Putin's arrival that Moscow did not expect a breakthrough in the gas talks.

Sechin also that the two sides had resolved their differences over China's debts for Russian oil exports.

"This question has been settled and removed from the agenda," said Sechin.

Putin had earlier appeared to suggest that more give-and-take was needed before the gas could begin flowing.

"Our talks a taking place in a business-like atmosphere, with the mutual desire to find compromise on difficult questions which inevitably arise given the sheer volume of our relationship," Putin told Premier Wen Jiabao in the Great Hall of People, a cavernous official building in central Beijing.

"As far as the as the economy and trade are concerned, issues of practical nature are being resolved, and this is good," Putin added in remarks made at the start of his talks with Wen that reporters were allowed to see.

"Those who sell always want to sell at a higher price, while those who buy, want to buy at a lower price. We need to reach a compromise which will satisfy both sides," said Putin, who did not directly mention the gas issue.

China's Xinhua state news agency praised Putin's visit as one that "will mark ever-deepening China-Russia cooperation." But the two giant neighbors have so far failed to seal a huge gas deal that has been negotiated for five years.

Russian state bank VEB and the China Development Bank (CDB) signed a deal for the Chinese bank to invest $1.5 billion in building the first stage of UC RUSAL's 750,000-tonne Taishet aluminum smelter.

As well, the China Investment Corp agreed to invest $1 billion in a joint Russia-China Investment Fund set up in partnership with a Russian state-backed vehicle to promote direct investment.

The tortuous gas negotiations have been a reminder that, despite frequent professions of brotherly goodwill between Moscow and Beijing, relations are held back by mutual distrust, especially on the Russian side, extending back to the Cold War, when border disputes almost erupted in full-fledged war.

But the two neighbors have found common ground in opposing what both see as excessive meddling and pressure on the international stage by the United States and its allies.

Russia and China joined forces last week to veto a European-drafted U.N. Security Council resolution condemning Syria for its bloody crackdown on protesters.

Putin has brought an army of Russian executives including the CEOs of state-controlled energy firms Gazprom and Rosneft and aluminum producer UC RUSAL, all eager to exchange their wares for Chinese cash.

Wednesday, Putin will meet Chinese President Hu Jintao.

(Additional reporting by Chris Buckley and Sui-Lee Wee, Editing by Jonathan Thatcher)

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