Rosneft, Sinopec Sign 10-Year Oil Payment Deal

The world's biggest listed crude producer Rosneft and Chinese oil giant Sinopec announced on Tuesday a framework agreement on advance payment by Sinopec for Russian oil deliveries.

The deal will see Sinopec -- China's largest oil refiner -- pay 25-30 percent of the total cost of a 10-year contract under which Rosneft will deliver 10 million tonnes of oil per year starting in 2014.

"These are the normal terms that apply to our clients," Interfax quoted Rosneft chief executive Igor Sechin as saying during a signing ceremony in Beijing.

The deal was announced during a visit by Prime Minister Dmitry Medvedev to Beijing that aims to also lay the groundwork for the first Russian natural gas deliveries to the booming Chinese energy market.

Medvedev valued the total cost of the Rosneft-Sinopec contract at $85 billion (62 billion euros).

The heavyweight Moscow delegation in Beijing included the heads of the country's top oil and gas producers as well as Russian Energy Minister Alexander Novak.

Both Medvedev -- who once served as chairman of state-held energy behemoth Gazprom -- and Novak sounded an optimistic note on a potential deal being signed for Russian natural gas deliveries before the end of the year.

"We are now reaching a final agreement on a formula under which gas will start flowing from Russian to China," news agencies quoted Medvedev as saying.

"In essence, we have already agreed on a formula. Now we still need to agree on a price."

Moscow and Beijing have spent years haggling over the gas price -- a dispute that has seen China turn to the Central Asian energy market at Russia's expense.

Novak said that an agreement on the price and the signature of a contract before the end of the year would see Russian natural gas start flowing to the Chinese market in 2018-2020.

"The maximum volume would be 38 billion cubic meters of gas per year," the Prime business news agency quoted Novak as saying.