China ready to pay Russian Railways instead of YUKOS

China is ready to pay costs related to oil transportation to it by YUKOS this October if the oil company is unable to make these payments, Russian Railways President Genady Fadeyev told journalists after a meeting with his Chinese counterpart Liu Zhijun. According to Fadeyev, Russian Railways plans to transport to China 500,00 tons of oil produced by YUKOS in October. Earlier he ruled out the possibility to fund oil transportation if YUKOS is unable to pay these costs.

On September 19 YUKOS has announced that it would suspend supplying oil to CNPC starting September 28. YUKOS is to supply 1m tons of oil to China before the end of this year. Earlier the beleaguered oil giant projected 3.8m tons in oil supplies to China. It is also to supply 2.7 m tons of oil to another Chinese company, Sinopec. YUKOS has not announced its decision to suspend oil supplies to Sinopec yet. According to an agreement between YUKOS and Russian Railways, in 2004 6.4m tons of oil should be supplied to China. YUKOS was to boost its oil supplies to China to 8.5m tons in 2005 and to 15m tons in 2006.