China building energy ties to Russia, Putin says

MOSCOW, June 23 (UPI) -- Chinese partnerships in the Russian energy sector are expected to help establish a stronger diplomatic relationship, Russian President Vladimir Putin said.

"China is increasing its presence in our energy market, it is a major shareholder in one of our significant projects, Yamal LNG, and it has acquired 10 percent of the shares in one of our leading chemical holdings, SIBUR," Putin told the official state-run Xinhua News Agency. "We welcome these Chinese investments not only as a means of placing financial resources but also as a means of further developing our partnership."

The Kremlin's press service this week said Putin aims to build an "equal and confidential partnership" with China during weekend meetings with Chinese President Xi Jinping. China is linked already to Russian oil supplies through the East Siberia-Pacific Ocean pipeline.

Reports this week suggested China may be a potential investor in Russian oil company Rosneft, on the table as a possible target of a privatization scheme meant to help pull Russia's energy-based economy out of recession.

According to the World Bank, the Russian economy will shrink by 1.6 percent this year before recovery emerges in 2017.

Russian natural gas Gazprom, meanwhile, has a 30-year sales agreement with China National Petroleum Corp. to deliver natural gas through a pipeline dubbed the Power of Siberia. Gazprom in May said the company was scaling back its short-term vision for the project after building about 70 miles of the pipeline in order to control spending and in April accused its counterparts at the China National Petroleum Corp. of using liberalization as a bargaining chip on the price it would pay for Russian LNG.

Putin said that, for the Kremlin, projects like these are still important for strengthening ties with China, the second largest economy in the world.

"Add to this diplomatic, military, and military-technical cooperation," he said.