Russia and China has settled the oil conflict which lasted more than a year. Both parties agreed on the changes in the contract. Now Russian companies Rosneft and Transneft will provide China National Petroleum Corporation (CNPC) a discount of 1.5 dollar per barrel, while the Chinese company has to fully repay the debt of 134 million dollars. Because of the changes to the contract, the Russian company Rosneft will forego about 3 billion dollars.
 
The contract will be approved by the board of directors in Rosneft. Rosneft, Transneft and CNPC have finally agreed on new terms of Russian oil supplies to China. The contract will be amended, in which Rosneft and Transneft will give state-owned CNPC discount of 1.5 dollar per barrel.
 
"It will take effect retroactively, the discount is valid from the beginning of November last year," said one of the sources in Russian companies. CNPC, in turn, must repay the debt for the supply of oil from the beginning of 2011 – a total of 134 million dollars, "The entire amount has been transferred to Transneft in the middle of January," said one of the sources.
 
Rosneft, Transneft and CNPC does not comment on the changes of the contract.
 
According to sources, the changes in the contract has been approved by the board of directors of Transneft on February 22. Today, this issue will be considered at the Board of Directors of Rosneft for the final approval of the new contract. The company will have to hold a special meeting of shareholders on April 9.
 
The controversial agreement was signed in 2009. In exchange for loans from China Development Bank to Rosneft and Transneft in the amount of 15 billion dollars and 10 billion dollars respectively, Russian state-owned companies committed to supply China with 15 million tons of oil annually via the Eastern Siberia–Pacific Ocean oil pipeline (ESPO pipeline) from year 2011 to 2030.
 
To do this, Transneft has entered into an agreement to purchase six million tons of oil from Rosneft at a price tied to the value of exports to China. Price is determined by a special formula based on quotations of Argus and Platts FOB at the end point of ESPO – Kozmino port.
 
But as soon as deliveries began in January 2011, with contract problems. The parties have different estimated coefficient T, which defined the logistics costs of Transneft for delivery of oil. CNPC underpaid by 13 dollars per barrel. Russian companies claimed that the loss on the position of CNPC for the period of the contract may amount to 30 billion dollars.
 
But experts have different opinions the new arrangements. Michael Perfilov of Argus believes that the conditions of supply should remain profitable for Russian companies, as China is now more interested in getting resources than the bargain of "small profit".
 
Chinese companies are buying oil in Kozmino, in recent months they have become one of the most active buyers of ESPO, offering relatively high prices.