Reversing an earlier decision, Russia’s Rosneft company has apparently agreed to transport 200,000 metric tons of oil monthly through Mongolia to China. 

On May 30, Rosneft had announced they would no longer be able to supply oil to China via rail through Mongolia. At the time, the company was seeking reductions in rail tariffs to make the trip feasible. 

Rosneft has said they need an $8 per metric ton of oil reduction in rail costs to allow them to profitably transport oil to China. 

Following negotiations, it appears the Russian rail monopoly, Russian Railways company, has agreed to a 22 percent tariff discount. Rosneft had previously asked for a 30 percent reduction. 

UNIPEC, the trader of China’s Sinopec company, has also agreed to certain price changes to allow Rosneft to come closer to its targeted transportation price. 

The final hurdle, expected to be overcome within days, is with Ulan-Bator Railway (UBRW), a Russian-Mongolian company. However, it is believed UBRW will also reduce its tariff to allow the deal to proceed. 

Rosneft will transport oil by rail through the Naushki passage at the Russia-Mongolia border. In addition, Rosneft currently transports oil to China through Manchuria.

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