Russian Pipeline Monopoly in Legal Dispute with China

Following an impasse in negotiations between state-owned Russian pipeline monopoly Transneft and China Development Bank, Transneft is willing to repay early its $10 billion, 20-year loan from the China Development Bank if it has to file a suit in a London court against China over the price of oil it has already supplied.

Speaking on condition of anonymity, a Russian source intimately involved in the discussions said, "During the negotiations it was noted that the agreement on supplies of Russian oil to China is still being unilaterally violated by the Chinese. The oil supplied is not being paid for in full. It was said that if the dispute is sent to the London court, Transneft will be ready to repay its 20-year loan to China ahead of schedule," Russia’s RIA Novosti new agency reported.

In January Transneft began supplying oil to China for the first time via the first stage of the newly constructed Eastern Siberia - Pacific Ocean pipeline (ESPO), which is now transiting over one million tons per month, but now alleges that China National Petroleum Corp. (CNPC) has underpaid for supplies, citing differences over tariffs, only repaying some of its overdue fees in May. The first stage of the EPSO pipeline traverses a 1,713-mile arc above Siberia’s Lake Baikal.

By. Charles Kennedy, Deputy Editor OilPrice.com