Shareholders of Russia's state-controlled oil giant Rosneft approved a discount of $1.5 per barrel for oil supplies to China, Rosneft said in a statement on Monday.
Rosneft's shareholders made the decision at their extraordinary meeting held in absentia on April 10, the statement said.
In early 2011, Rosneft and Russian oil pipeline monopoly Transneft started supplying crude oil to China via the East Siberia –Pacific Ocean Pipeline (ESPO) under a $22-billion deal for 20 years, but later said that China National Petroleum Corporation had underpaid for the crude supplies and unilaterally reduced payments by seven percent.
Last fall, the sides reached agreement on changing the terms of oil supplies to China. Under the deal, China agreed to repay its debt of $134 million while the Russian companies undertook to change the price formula and provide a price discount for oil supplies to Russia's neighbor.
"Given that the debt is repaid, the price of oil supplied under the agreement will be reduced by a discount of $1.5 per barrel from November 1, 2011, to the period of duration of the contract on the purchase/sale of crude oil," the statement said.
The controversial agreement was signed in 2009 when China Development Bank agreed to extend $15 billion and $10 billion to Rosneft and Transneft in much-needed loans in exchange for their commitment to supply 15 million tons of crude oil to China annually via the ESPO.