Russia, China Resolve Oil Pricing Dispute

Russian state-controlled companies Rosneft and Transneft have settled a dispute with China over the price for Russian crude oil supplies via pipeline, business daily Kommersant reported on Tuesday.

The agreement gives China National Petroleum Corporation (CNPC) a discount of $1.5 per barrel, which will cost Rosneft around $3 billion, Kommersant wrote, citing sources close to the negotiations.

Officials from the Russian firms, and CNPC, were not immediately available to comment on the report.

Russian oil pipeline monopoly Transneft and Russia's top crude producer Rosneft started pumping oil to China in January 2011 via the first stage of the East Siberian-Pacific Ocean (ESPO) pipeline after receiving $25 billion in loans from Beijing.

But Russia and China have been mired in a row over pricing, which is based on the price of Russian crude in its Baltic ports which a differential applied for the cost of transporting the oil eastward.

Reuters sources have said the Chinese side objected to the use of transport costs to the Pacific port of Kozmino as a basis for the differential, since the Chinese border crossing is much closer to Russia's east Siberian fields than the port.

According to Kommersant, CNPC paid a total of $134 million in arrears to Rosneft in the middle of January.

The Rosneft board will review the new pricing terms at a Tuesday meeting, while the board of Transneft approved the changes on Feb. 22, the newspaper wrote.