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Gazprom insists gas be supplied to China via “western corridor”

October 17, 2011, 17:41 UTC+3

China insists that gas be initially supplied by the eastern route, which is believes will reduce the cost of Russian gas supplies

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MOSCOW, October 17 (Itar-Tass) —— Gazprom insists that Russian gas be initially supplied to China via the “western corridor”, the company’s spokesman Sergei Kupriyanov said.

“At this point, the western route is the only subject of negotiations,” he said after talks with China National Petroleum Corporation (CNPC) on Monday, October 17.

China insists that gas be initially supplied by the eastern route, which is 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 U.S. dollars per 1,000 cubic metres.

Negotiations between the two companies on this issue took place last week but produced no result.

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.

During a visit to China a week ago, Vice Prime Minister Igor Sechin said Russia and China should specify the “road map” for the gas talks within two weeks. “We believe that the parameters of cooperation should give due regard for the interests of both consumers and suppliers. We have agreed that within the next two weeks we will specify the ‘road map’ that will include the analysis of consumption, sources of supply and Gazprom’s place in this structure of supplies,” he said.

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 calls, among other things, for organisation by Gazprom of gas supplies to China. It was signed on October 14, 2004. In June 2009, the governments of Russia and China signed a memorandum of understanding for cooperation in the fields of natural gas.

In October 2009, Gazprom and CNPC signed a framework agreement on the main terms of natural gas supplies from Russia to China. In December 2009, they signed the basic terms of supply. But so far no agreement on the price of gas has been reached.

Gazprom and CNPC have set up a joint coordination committee that explores issues pertaining to the organisation of Russian gas supplies and conducts commercial negotiations on the price of supplies.

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