India Intelligence Report
No Russia-China Accord on Pipeline

Visiting Russian President and his Chinese counterpart Hu Jintao signed three pacts but failed to agree on a pipeline to carry Natural Gas from Siberia to China. Enjoying closer political contacts from later 198s resulting in a 2004 final settlement on their border dispute, Russian-China trade grew by 37 to net USD 30 billion last year. Russia is also China's largest weapons supplier.

However, despite many years of negotiation, the two countries failed to reach an agreement that will allow China's investment in the Russian energy sector. China hopes to raise Russia's contribution of oil imports from the present 8% to 15% in the next few years. Like most countries, China wants to lower its dependence on oil from the strife-prone West Asian region. China hoped to get a branch of the pipeline from Siberia, intention to carry gas for the Pacific Rim to meet this goal.

After Saudi Arabia, Russia is the second largest exporter of oil in the world and shipped by rail 15 million tons (an increase of 25%) to China last year. Russia said that eventually, it would ship 60-80 billion cubic meters of natural gas a year to China.

However, the two countries signed three deals agreeing to principle to cooperate on oil and gas exploration.

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