Wednesday, March 22, 2006

Worlds largest energy cooperation agreement.

A number of important cooperation agreements have been signed between Russia and China during the visit to China of President Putin.

The most important are in the energy cooperation and a number of joint ventures.It is readily identified that the growth of the Chinese economy has been fueling the demand of commodities and energy products.

The strategy of stability of energy prices and the expansion of the use of technology to sustain energy prices as a priori for the expansion of developing economies is evidenced by a number of important announcements.

First the development and supply of gas from East Siberia by pipeline to northen and western China .The port cities are developing infrastructure for LNG which will be supplied from Sakhalin.The two pipelines will each supply 30-40 billion cu m.

The development of a secondary oil pipline extension (this will also supply Japan and Korea) with capacity of around 80MMT.

The tendering and construction for further nuclear power plants,of which Russia has two under construction in China with the first to go on line later this year.

The construction and supply of electricity from Hydro from Siberia as the Amur project comes online with its 2000 mw and the constructtion of the 3000 mw Boguchansky Hydro.These developments and others are expected to use 5% of the siberian hydro resource.

The agreements between the Russian UES electricity giant,with the upgrading of the Chinese national grid by Russia will allow the further export of 60 billion KWH.

An announcement of additonal vehicle efficiency taxes in China The government has raised the tax on cars with engines bigger than 2 litres from 8% to 20%, as it looks to reduce pollution and oil consumption.
Cars with smaller engines, between 1 and 1.5 litres, will have their taxes cut to 3% from 5%. This is part of the government's strategy of rebalancing growth and reducing energy demand,along with off peak energy rate decreases.This near simultaneous announcement is to seem to balance the criticisms of Chinas growth.

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