MOSCOW (AFP) - Russia promised to sort out Yukos oil deliveries to China as Chinese Premier Wen Jiabao arrived for talks dominated by the struggling oil major's decision to cut supplies to the energy-hungry Asian giant.
Wen and a high powered delegation of ministers flew Thursday into Moscow where officials said they would seek guarantees for the delivery of Russian oil given the crisis at Yukos.
Yukos is Russia's sole direct supplier to the Chinese market and the company announced Monday a suspension of all deliveries to the state-run China National Petroleum Corp (CNPC) -- accounting for 60 percent of its sales to China.
Russia's number one oil producer, which is faced with a cash crunch because of multi-billion tax demands, said it could not afford to pay for the delivery of the oil exports, which are transported by rail to China.
However, Russian railways chief Gennady Fadeyev said after meeting Chinese Railways Minister Liu Zhijun in Moscow that CNPC had offered to pay upfront for the transport costs in October and deduct this from its subsequent payments to Yukos.
"In connection with some difficulties of Yukos in paying for the costs of oil transportation, the Chinese company is ready to pay upfront for these charges in October," Fadeyev was quoted as saying by the Interfax news agency.
Russia would ensure the issue was resolved before the start of October, he said, according to Interfax.
The embattled Yukos, which had been due to supply a million tonnes of oil to CNPC by the end of the year, said it would cut all pipeline and rail deliveries by September 28.
Beijing on Tuesday urged Moscow to pressure Yukos to honour its commitments, saying the two giant neighbours had made a strategic decision to expand cooperation in the energy sector, especially in the oil sector.
Wen is also to push for Russia to give preference to a pipeline to China over a rival route to Japan as the world's second largest oil consumer after the United States seeks to diversify its energy supplies.
"We hope that the Russian government gives priority to the construction of a pipeline in the direction of China which is the most stable market for Russian oil," Wen was quoted as saying at the airport by the ITAR-TASS news agency.
China, according to its premier, plans to import 15 million tonnes of oil from 2006.
Despite Yukos cutting supplies to CNPC, it said it would continue deliveries to another Chinese oil company, Sinopec, which is to receive about 750,000 tonnes by the end of the year.
China is the world's second largest-oil consumer after the United States and has seen imports soar as flagging domestic production has failed to keep up with booming economic growth and demand for gasoline in the auto market.
Yukos's oil represents roughly seven percent of Chinese consumption.
Wen also announced that during the visit he intended to wrap up bilateral negotiations on Russia's accession to the World Trade Organisation (WTO).