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Gazprom plans to sign contract with China in 2011

According to his information, China’s market of natural gas has a high development potential

YUZHNO-SAKHALINSK, September 27 (Itar-Tass) —— Gazprom plans to sign a contract with the China National Petroleum Corporation (CNPC) on gas deliveries to China before the end of 2011, Gazprom Deputy Chairman of the Board Alexander Medvedev said in his report at a conference entitled “Oil and gas of Sakhalin—2011”, which opened here on Tuesday.

“Difficult talks have been going on for a long time, but perceptible headway has been made. A contract on the purchase and sale of gas with China may be signed before the end of 2011. After that the building of the needed transport capacities may be started, and gas deliveries may begin late in 2015,” Medvedev said.

According to his information, China’s market of natural gas has a high development potential. China’s demand for gas is expected to exceed the figures for Europe by 2030. “This opens up concrete prospects for Russian gas deliveries even if China succeeds in the production of shale gas. At present Gazprom is analysing a possibility of the pipeline export of natural gas by two corridors, with its total amount standing at 68 billion cubic metres,” he continued.

Medvedev stressed that in comparison with Gazpfom’s projects in the Far East South Stream looks as a project with average investments. “The growth of the demand for natural gas in the eastern part of Russia and in the Asian countries permits Gazprom to globalize trade and to reduce its dependence on individual clients,” he added. On the whole, Gazprom forecasts that by 2030 it will account for some 13 per cent of the gas market of North Eastern Asia (the figure for the European market is over 30 per cent), said a representative of the Gazprom press service.

Medvedev and CNOGC Vice President Wang Dongjin held another round of talks on the terms of gas deliveries to China in Alma Ata last weekend. “During the talks the parties updated their commercial proposals on the terms of the deliveries of natural gas from Russia to China,” the press service official continued.

The agreement on strategic partnership between Gazprom and CNOGC, which provides, among other things, for the analysis of problems connected with the organisation by Gazprom of gas deliveries to China, was signed on October 14, 2004. In June 2009 the Russian and Chinese governments signed a memorandum of understanding on cooperation in the gas sphere. In October 2009 Gazprom and CNOGC signed a framework agreement on the main terms of gas deliveries from Russia to China. In December 2009 the Basic Terms of Gas Deliveries were signed. Agreement on the gas price has not been reached at the numerous rounds of talks so far. Gazprom and CNOGC created a joint coordinating committee, which tackles problems connected with the organisation of Russian gas deliveries to China and holds commercial talks on the gas price.