China and Russia to build world’s biggest thermal power plant

The plant will be developed by Eastern Energy Company, a subsidiary of Inter RAO, the Russian state-run power utility, Vedomosti newspaper reported.

The plant will supply 30-50 kilowatts per year, which is about 5 percent of the Russian Federation’s total current production, General director of Eastern Energy Company, Mikhail Shashmurin told Vedomosti.

It will cost between $7.5 and $12 billion, according to Natalia Porokhova, an energy analyst at Gazprombank. Talking to another Russian newspaper Kommersant, Sergey Beiden from Otkrytie Financial Corporation estimated the cost to be between $12.5 – $24 billion.

At first a 5 gigawatt project was in the works, but at the request of the State Grid Corporation of China (SGCC), the joint venture will look at “additional exploration,” Shashmurin said. To deliver the energy to Beijing, where demand is strongest, an estimated 2,000 km of transmission lines will need to be installed.

A framework agreement was signed in 2013 between the two state-owned companies which explored the possibility of building power plants in Russia’s Far East with the goal of exporting 40-50 billion hours to China. The final decision will come from China’ Committee of Development and Reform, and will include a 5-year draft economic plan. The Chinese want to be shareholders, and according to Shashmurin, could own up to 49 percent in the project.

The first long-term power contract with China was inked in 2012, and stipulated 100 billion kilowatts of supply over 25 years to the Heilongjiang province. In 2013, Inter RAO delivered 3.39 billion kilowatts to China, Shashmurin said.

Inter RAO halted exports to China in February 2007 after Russia increased duties on Chinese sales. Trade resumed in 2009.

The Russian Far Eastern Amur region was devastated by floods last summer, with nearly 100,000 people were affected, and thousands of homes submerged. There was great concern that a heat power plant in Khabarovsk would be submerged by flood water. When floods hit in 2007, the reservoir of the Zeya hydroelectric plant nearly overflowed.

Russia’s biggest natural gas producer, Gazprom is negotiating gas delivery with CNPC.

 

 

Source article from RT.com here

Weekly Update: Top 5 International Business News Trends

1. U.S. deficit falls to $680 billion. The federal government’s latest annual deficit is the smallest it’s been since 2008, according to Treasury Department data released Wednesday. http://money.cnn.com/2013/10/30/news/economy/deficit-2013-treasury/index.html

2. Islamic world slipping behind economically, Pakistan PM warns. Economic and intellectual stagnation has left Islamic nations incapable of punching their weight in the wider world, the prime minister of Pakistan has warned. http://www.telegraph.co.uk/news/worldnews/asia/pakistan/10411814/Islamic-world-slipping-behind-economically-Pakistan-PM-warns.html

3. Is Puerto Rico the next Detroit? Puerto Rico has been called the next Detroit and the next Greece. It’s buried in debt and possibly teetering on the edge of bankruptcy. http://money.cnn.com/2013/10/31/investing/puerto-rico-hedge-funds/index.html

4. US criticizes Germany and China policies.The US has criticized Germany’s economic policies, saying that its export-led growth model is hurting the eurozone and the wider global economy. http://www.bbc.co.uk/news/business-24753267

5. Russia to invest $1.5 bn into new domestic energy projects in Ecuador, making the South American country a key partner in the region, President Vladimir Putin said at a meeting with Ecuadorian President Rafael Correa in Moscow. http://rt.com/business/russia-invest-ecuador%20energy-956/

 

US-Russia Tensions

The bilateral meeting between President Obama and Russian President Vladimir Putin initially scheduled in Moscow in September, before the Group of 20 summit, has been canceled. The cancellation was in retaliation to Russia granting NSA leaker Edward Snowden a year’s asylum in the country last week.

With the Group of 20 summit scheduled in St. Petersburg in September, it remains unclear whether US-Russia relations will have been resolved by then.

What are your thoughts on the matter? Will this disagreement negatively affect the G-20 summit on trade relations? Post your thoughts in the comment section below!

Culture Clues: Russia

When in Russia, it’s a good idea to have a large supply of business cards to hand out. They should be printed in Cyrillic, and the university degree of the Western businessperson should be included. During negotiations, be sure to hand out one to everyone present, in order not to overlook someone who might turn out to be important.

What else should one know about doing business in Russia? Share in the comment section below!