Watching the World: Putin coy in China

March 27, 2006
LONDON-Russian President Vladimir Putin arrived in Beijing last week on a visit that Chinese officials hoped would lead to a firm commitment over the route of an oil pipeline from Eastern Siberia.

LONDON-Russian President Vladimir Putin arrived in Beijing last week on a visit that Chinese officials hoped would lead to a firm commitment over the route of an oil pipeline from Eastern Siberia.

“We are full of confidence that the branch pipeline will be built,” said Chen Gang, chairman of China National Petroleum Corp., the country’s largest energy company.

Chen was referring to the pipeline spur off the main line that China has been hoping for ever since Putin’s government cancelled a 2003 agreement to build a pipeline ending at Daqing, China’s oil capital in the northeast.

That agreement ended after Japan offered a more attractive financial package to reroute the line to a Russian port. Although the Daqing route is shorter and cheaper, the Japanese proposal gave Russia big ideas.

Bigger market

Above all, the Japanese proposal made more sense than the Chinese one. The new line meant that the Russians could market their oil to a larger market instead of being reliant on China as its sole customer.

The financial implications of that possibility-especially in a rising oil market-were hardly lost on the Russians, who have become notoriously capitalistic in the years since dropping their former Communist ideology into the ashcan of history.

But the Russians also are not interested in alienating the Chinese. Apart from market considerations for their oil and gas, the Russians derive much benefit from the Chinese-not least a political buffer against what they both see as US hegemony.

Thus, Russia’s ambassador to China, Sergei Razov, did his best to help the Chinese maintain their confidence-to say nothing of their face-in the pipeline project, saying ahead of Putin’s visit that “energy cooperation was progressing smoothly” and that the pipeline project was being negotiated.

Russians careful

But Razov was also careful to keep Russian financial interests firmly in view. “It’s a large-scale project of great vision that requires a high level of investment,” he said, referring to Moscow’s repeated wish that China pay for most of the project’s construction.

Despite the best efforts at such diplomatic finessing, however, the visit ended without the Chinese getting what they wanted.

Putin said: “The Russian Federation has made a decision to build an oil pipeline from East Siberia to the Pacific coast.” But he continued the coyness that has characterized Russian negotiations for the past 3 years.

“Transneft and the China National Petroleum Corp. signed a protocol yesterday [Mar. 21] to study the issue and build an extension of this oil pipeline to the People’s Republic of China,” he said.

Then came the coy kicker: “If the project is implemented, and I have no doubt about it, it will considerably increase the volume of oil deliveries from Russia to China.”

Little wonder Chinese media call the relationship with Russia “hot on top and cold on the bottom.”