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UPDATE 2-Russia, China say need more time to reach gas deal

Published 11/23/2010, 10:46 AM

* Putin, Wen talk energy, trade

* Dep PM Sechin sees no gas price deal until mid-2011

* China, Russia trade is booming

* Putin, Wen did not discuss North Korean strike

(Updates with Putin, Wen quotes, details)

By Alissa de Carbonnel

ST PETERSBURG, Russia, Nov 23 (Reuters) - Moscow and Beijing are unlikely to agree the price of Russian gas supplies to China before mid-2011, Russia's top energy official said, but the two countries' prime ministers noted on Tuesday bilateral trade was booming.

Russia, the world's biggest energy producer, is eager to increase sales of gas to the fastest growing major economy but price proved a sticking point in the talks between Prime Minister Vladimir Putin and his Chinese counterpart Wen Jiabao.

"I think by next summer we will be able to discuss concrete parameters for a commercial contract (on gas supplies)," Igor Sechin, who holds sway over Russia's energy sector, told reporters after meeting Chinese officials.

Russia says China should pay prices similar to those Gazprom charges European customers, but Beijing wants a discount. The sides were about $100 per 1,000 cubic metres apart, according to Chinese officials last week.

Under a deal signed between Gazprom and China National Petroleum Corp (CNPC) on Sept. 27, Gazprom will sell 30 billion cubic metres (bcm) of gas per year to China from 2015. Putin said the gas talks were "successfully moving forward".

IMPORTANT MARKET

Putin, Russia's paramount leader, will have to grapple with China's drive to secure gas supplies from Central Asian producers such as Turkmenistan and Uzbekistan and the implications of growing production of shale gas for expensive pipeline projects.

"China is an extremely important market for us, which we must imperatively work in," Sechin said, adding that China has the capacity to meet only 7 percent of its gas needs internally.

Under the deal the two countries will have to build the Altai gas pipeline -- stretching from Siberia to China's Western border with Russia.

After the meeting, which took place in Russia's northern city of St.Petersburg, Putin and Wen said bilateral trade rose by 57 percent to $41 billion this year and praised an agreement to boost the use of the yuan and rouble.

"So far we have been paying each other in foreign currencies, first of all in dollars. Now, and this is only the first step, trade in the rouble has started in China. In December the yuan will be traded in Moscow," Putin said.

China accounts for 8.3 percent of Russia's total trade. It is on track to overtake Germany as Russia's biggest trade partner after discounting the Netherlands, formally the biggest partner because its liberal corporate legislation encourages many Russian firms to register there.

Putin said Russia's largest bank, Sberbank, had negotiated a $2 billion loan from China's Eximbank to finance joint projects.

Russian firm Atomstroyexport and China's Jiangsu Nuclear Power Corporation (JNPC) signed a deal to build two more reactors at the Tianwan nuclear power station, the first Chinese nuclear power plant using Russian technology.

The two leaders did not discuss North Korea's attack on a South Korean island and focused on the economy, Putin's spokesman said, although Wen mentioned political cooperation between the two emerging powers in his statement.

"We plan on continuing our cooperation ... toward the formation of a fair world," Wen said, pointing to formats such as Shanghai Cooperation Organisation (SCO), a regional security group whose prime ministers are set to meet later this week. (Reporting by Alissa de Carbonnel; Writing by Gleb Bryanski, editing by Anthony Barker)

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