Gazprom has no disagreements with China for gas supplies

Gazprom has no disagreements with China over future gas supplies to that country, Gazprom CEO Alexei Miller told Itar-Tass on Wednesday, April 3. “There are no disagreements [over the price] at this point,” he said. Miller recalled that the western route for gas supplies to China had been considered earlier, which created price-related problems. “Now we give priority to the eastern route,” he said. The eastern route is an extension from the Sila Sibiri (The Force of Siberia) gas pipeline. “We have not started negotiations yet. We will start them shortly. We have a rather tight schedule and we hope to sign the main terms of the contract by June and a long-term contract for 30 years before the end of the year,” Miller said. The main parameters of supplies have been agreed with Chinese partners: crossing point in Blagoveshchensk; volume of supply 38 billion cubic metres with a possible increase to 60 billion cubic metres; start of supply 2018. “The price will be determined using a formula where these basic parameters play a key role,” Miller said. Over the past 10 years, natural gas consumption in China has increased from 24 billion to 100 billion cubic metres a year. There are several possible routes for bringing gas to China. Gazprom insisted that Russian gas be initially supplied to China via the “western corridor.” China insisted that gas be initially supplied by the eastern route, which it believes will reduce the cost of Russian gas supplies. At this point, the cost of Russian gas deliveries, including transportation, is close to China’s offer of 250 US dollars per 1,000 cubic metres. The “western corridor” is the Altai gas transportation system that will supply gas from Gazprom’s gas fields. The “eastern corridor” can deliver gas from fields in Eastern Siberia and Sakhalin. Gazprom is now exploring the possibility of exporting gas to China via two corridors in the total amount of up to 68 billion cubic metres. The agreement on strategic cooperation between Gazprom and CNPC was signed on October 14, 2004. In June 2009, the governments of Russia and China signed a memorandum of understanding for cooperation in the field of natural gas. The fuel and energy sector is one of the priority areas of Russian-Chinese cooperation. “Stable supplies are made by the Russian-Chinese oil pipeline, work is underway to draft a feasibility study for a joint oil refinery in Tianjin, Russian coal supplies increase every year. The first stage of the Tianwan nuclear power plant and the Chinese experimental fast neutron reactor built with Russia's assistance have already been put into operation, and the construction of the second stage of the Tianwan nuclear power plant is about to start,” a source in the Russian government said earlier. The two countries are “also exploring joint projects in such areas as civil aircraft industry, including the development of a wide-bodied long-haul plane, environmental protection, nanotechnologies. Cooperation with the international Skolkovo Foundation and Chinese innovation companies is developing. It is also planned to intensify cooperation in the field of pharmaceutics, medical equipment, chemical industry, and also civil shipbuilding,” the source said. Despite the global economic hardships, Russia and China have increased bilateral trade which is expected to exceed 90 billion US dollars in 2012, compared to 83.5 billion US dollars in 2010, the source, added. He noted that Russia’s negative balance of trade with China has been shrinking lately. The leaders of Russia and China have lately set the task of bringing bilateral trade turnover to 100 billion US dollars by 2015 and to 200 billion US dollars by 2020.