Russian oil firm Rosneft still cannot sign a deal with China's Sinopec on oil supplies via Mongolia as it would be loss making despite a drop in railway fees, the firm said on Tuesday.
"After the (railway fee) discount approval we still have a hole of $2 per barrel, which is critical to us to start export operations on this route," Dmitry Bogdanov, Rosneft's vice president for exports, told reporters.
Last week, Russia's federal tariff service cut railway tariffs on the route by 22 percent in the hope of attracting more crude flows but Bogdanov said Rosneft had been seeking a bigger discount.
"If our Chinese partners take on themselves the pricing difference we would re-direct some export volumes from Western destinations to China," said Bogdanov. "If we don't get over the pricing difference, we will not sign the contract," he said.
Russia has failed to meet its oil supply targets to China in the last three years as oil firms say the route is expensive compared to pipeline shipments to Europe. Last year, the country supplied 10 million tonnes (200,000 barrels per day) instead of the planned 15 million tonnes.
Rosneft supplies the bulk of volumes via the Zabaikalsk railway station near the Chinese border. Industry sources have said Rosneft wanted to sign in March a deal with Unipec, the trading arm of Sinopec to reopen a railway station in Naushki near Mongolia to add 3 million tonnes of crude a year (60,000 barrels per day) to its current supplies.
China is the world's number two oil consumer, and Russia is the world's second-largest exporter. Russia plans to build major oil and gas pipelines to China by the end of this and early next decade.