A deal to supply the world’s second biggest economy with up to 68 billion cubic meters of Russian gas a year over 30 years has long been delayed over pricing disagreements.

“We are nearing the final stage of work on gas supplies,” Russian Prime Minister Vladimir Putin said after talks with Chinese Premier Wen Jiabao.

Putin is hoping his two-day visit — his first trip abroad since revealing last month that he plans to reclaim Russia’s presidency — will broaden trade with China, which he expects to grow to $200 billion in 2020 from $59.3 billion last year.

“Our goal is to diversify our economic ties,” Putin said.

“I think that everyone will agree that compared with the known difficulties in the global economy, this aspect of the Russian-Chinese relationship (the growing trade) has a stabilising impact.”

An agreement on Russia’s gas deliveries to the world’s second-largest energy consumer, China, would boost Moscow’s efforts to reduce its export dependency on the European market. But Moscow and Beijing have haggled for five years over the commercial settings for the deal.

The tortuous negotiations have been a reminder that, despite frequent professions of brotherly goodwill between Moscow and Beijing, relations are held back by mutual distrust, especially on the Russian side, extending back to the Cold War, when border disputes almost erupted in full-fledged war.

Russia aims to supply China with 68 billion cubic meters (bcm) of gas — compared with up to 155 bcm it set to supply Europe this year — from 2015, but differences over pricing have been a major stumbling block after an outline agreement was announced back in 2006.

Earlier, his Deputy Prime Minister Igor Sechin said that there had been “significant” progress in the gas talks with Chinese Vice Premier Wang Qishan.

Yet despite the upbeat talk, there are plenty of stumbling blocks that could hold back a final agreement.

“Russia wants to link the gas price to oil prices the way it does in Europe, but China considers that price too high. So unless Russia was willing to move away from an index-linked deal it would be hard for any agreements to be made,” said Gordon Kwan, Head of Regional Energy Research for Mirae Asset Securities.

The price gap the two sides need to bridge remains around $100 per thousand cubic meters, which is some 30 percent of Gazprom’s average gas price to Europe this year, he said.

China “has a very strong upper-hand in these negotiations and there’s no reason why it needs to agree to an oil-linked price,” added Kwan.

Sechin’s comments also hinted that the gas deal must pass plenty of negotiating hoops before it becomes a reality.

“We have agreed that within the next two weeks we will outline a road map which will include a demand analysis, sources of supplies, the place of Gazprom in the structure of supplies,” he told reporters, referring to the Russian company set to suppl the gas.

Sechin said the two sides had nonetheless resolved their differences over China’s debts for Russian oil exports.

In Jan.1 Russia started a 300,000 barrels per day oil supply to China via first stage of East Siberia-Pacific Ocean pipeline. But earlier this year Russia has said China underpaid it tens of million of dollars due to a dispute on tariffs.

Putin earlier appeared to also suggest that more give-and-take was needed before the gas could begin flowing.

“Our talks a taking place in a business-like atmosphere, with the mutual desire to find compromise on difficult questions which inevitably arise given the sheer volume of our relationship,” Putin told Premier Wen Jiabao in the Great Hall of People, a cavernous official building in central Beijing.

“Those who sell always want to sell at a higher price, while those who buy, want to buy at a lower price. We need to reach a compromise which will satisfy both sides,” Putin added in remarks made at the start of his talks with Wen that reporters were allowed to see.

Russian state bank VEB and the China Development Bank (CDB) signed a deal for the Chinese bank to invest $1.5 billion in building the first stage of UC RUSAL’s 750,000-ton Taishet aluminum smelter.

As well, the China Investment Corp. agreed to invest $1 billion in a joint Russia-China Investment Fund set up in partnership with a Russian state-backed vehicle to promote direct investment.

On Wednesday, Putin will meet Chinese President Hu Jintao.