Russia and China will complete a new, 13 million metric ton per year refinery in the Chinese city of Tianjin in two years, with Russia to supply the bulk of the oil, Russian officials said after talks in China on Tuesday.
The refinery is a joint venture between China National Petroleum Corporation and Russia's top oil producer, state-owned Rosneft. They may invest $5 billion to build the facility, Interfax said, citing Russia’s Deputy Prime Minister Igor Sechin.
Under the agreement, Russia will supply 70 percent of the oil to the Tianjin refinery, said a spokesman for Sechin, who was in Tianjin for talks with Chinese Vice Premier Wang Qishan.
They laid the cornerstone for the new refinery after Tuesday's talks.
A feasibility study for the refinery in Tianjin will be ready in six months, said a Sechin aide. Sechin is leading meetings in the Chinese port city, before President Dmitry Medvedev’s visit from Sept. 26 to Sept. 28.
The oil will not come from Russia's newly completed 15 million ton per year pipeline branch to China, which is due to begin pumping oil from East Siberian fields to northern China early next year.
"One option is to create a joint venture which will buy oil on market terms and supply it to the refinery," the spokesman said.
The remaining 30 percent of the crude will come from the Middle East, the spokesman said.
CNPC and Rosneft’s refinery may have the capacity to process 13 million metric tons of crude a year, or 260,000 barrels a day, Rosneft said in an e-mailed statement.
As the next step, the companies plan to build a network of 500 gas stations in China's north, Sechin said.
“Let's hope that gas stations emblazoned with the logos of CNPC and Rosneft will become the embodiment of friendship and cooperation of the two countries for China's citizens,” Sechin said, Interfax reported.
The price, for many years the stumbling block to a final deal, would only be determined next year, Interfax quoted Gazprom export chief Alexander Medvedev as saying Tuesday.
Gazprom chief executive Alexei Miller said earlier that Russia and China would sign new "expanded" terms for Russian gas deliveries to China in September.