OREANDA-NEWS. September 05, 2013. The head of the Russian oil giant Rosneft, Igor Sechin, is to hold another round of talks with China’s CNPC next week, a source familiar with the agenda of the upcoming visit has told.

According to the source, the two parties will discuss various issues related to the construction of an oil refinery in the Chinese city of Tianjin.

"The main goal of the talks is to give Rosneft access to the Chinese retail market via the Vostok Petrochemicals joint venture; the company hopes to take part in building a network of up to 300 petrol pumps," the source says. "If the parties fail to reach an agreement on this, some of the new refinery ' s output may be exported."

The refinery in Tianjin is being built by Vostok Petrochemicals, in which Rosneft holds a 49-per-cent stake, and CNPC a 51-per-cent stake. The new facility will process 13 million tonnes of crude every year, of which Russia will provide 9 million.

The oil will be shipped by tankers to the Tianjin terminal, and then piped to the refinery via a 42 km pipeline. Light petroleum products will make up more than 80 per cent of the refinery’s output.

The target markets include northern China, the Central Plain region – which includes the cities of Beijing and Tianjin, as well as the Hebei, Shanxi, Henan and Shandong provinces – and the coastal provinces in eastern China. At some point in the future, the joint venture will also launch a new petrochemical facility and a network of up to 300 petrol pumps.

Last spring Russia and China signed an intergovernmental agreement on the construction of the refinery in Tianjin.

But the main question of how the Russian partner in the venture is to recoup its investment has yet to be resolved. Tight state regulation remains one of the key problems facing foreign companies in China.

Last year Larry Bates, an advisor to a Rosneft vice president, said that the launch of the refinery project in Tianjin was being held back by state regulation of petrol prices in China.

Rosneft was therefore insisting that Beijing give it a special license to export some of the future refinery ' s output.

In the autumn of 2012, following a meeting with the then Chinese leader Hu Jintao, Russian President Vladimir Putin said that China had agreed to allow such exports.

"The Chinese president has informed us that the joint venture in Tianjin will be allowed to export its output as well as sell it on the domestic Chinese market," Putin said.

He emphasized that "this is the first time China has made such a decision with regard to a partly foreign-owned company - a joint venture with a Russian company, in this particular case."

Rosneft chief Igor Sechin also told journalists at the time that "a decision has been made to allow the refinery to export some of its output, which makes the entire project economical."

Rosneft itself is not commenting on the upcoming round of the talks.