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Putin revives China's hopes for oil pipeline

BEIJING—Russian President Vladimir Putin tantalized energy-thirsty China on Wednesday with revived hopes for a pipeline to deliver crude oil, but he also warned that China should start buying more of Russia's manufactured products.

The $11.5 billion pipeline project from eastern Siberia to the Pacific Ocean, with a spur to the Daqing oil center in northeast China, has been on the drawing boards for years. Russian officials have been dragging their feet, wary of China's growing economic strength. Chinese officials had hoped Putin might give the project a green light.

Instead, Putin said there were many problems in China-Russia relations, citing a nearly 50 percent decline in Russian supplies of machinery and equipment to China in 2005. He said Russia's trade with China is now largely based on raw materials even as China sells more manufactured goods than ever to Russia.

"This presents the danger of instabilities in bilateral trade," Putin said, asserting that China must buy more industrial and high-tech goods from Russia.

Energy matters dominated much of the talks between Putin and his retinue of 800 officials and industrialists, and their Chinese hosts. Russia and China signed three deals on oil and gas cooperation on Tuesday.

Russia is the world's second-largest oil exporter, and China is the world's No. 2 energy consumer. China, seeking less dependence on Middle East oil, is pressing for more crude from Russia, its fifth-largest foreign oil supplier.

Feasibility studies are under way on the oil pipeline between the two countries.

"If the project could be implemented, which I have no doubt it can, it will help improve (Russia's) oil supply to China," Putin said.

The Russian president also said his country is ready to assist China in building nuclear reactors and civilian aircraft, as well as erecting special economic zones along the 2,700-mile common border.

Putin finished a two-day trip with a pilgrimage to the Shaolin Temple in the Songshan Mountains of central China, the legendary home to the martial arts form known as kung fu. Putin, a black belt in judo, watched high-flying demonstrations.

Before Putin's arrival, Chinese officials declared Sino-Russian relations at their highest point in history, noting that bilateral trade climbed 37 percent last year over 2004.

The two nations resolved a 40-year border dispute in 2004 and last summer conducted large-scale joint military maneuvers.

Still, China remains frustrated by barriers to direct investment in Russia's energy sector, and Russia is wary of China's growing economic and military power.


(c) 2006, Knight Ridder/Tribune Information Services.

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