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Russia, China agree technical aspects of western gas pipeline construction

Over the past 10 years, natural gas consumption in China has increased from 24 billion to 100 billion cubic metres a year and will double by 2012

Photo ITAR-TASS

Photo ITAR-TASS

MOSCOW, April 28 (Itar-Tass) —— Russia and China have agreed all technical aspects concerning the construction of the western gas pipeline.

“The sides have reached an understanding on technical questions pertaining to the construction of the western gas pipeline. The only question left is the price,” head of the Chinese Energy Department, Li Tinang, said on Saturday, April 28.

Over the past 10 years, natural gas consumption in China has increased from 24 billion to 100 billion cubic metres a year and will double by 2012.

China National Petroleum Corporation (CNPC) officials will travel to Moscow in May for talks with Gazprom on gas supplies.

CNPC International Department Director-General Zhang Xin said on that a Russian delegation would come to China for energy talks ahead of a Shanghai Cooperation Organisation summit to be held in Beijing in June.

He said Chinese officials would attend similar talks in Russia in May.

The price of Russian natural gas for China should more or less match that for Europe, Gazprom Deputy CEO and Gazprom Export CEO Alexander Medvedev said earlier.

“With time, when Russia and Europe come to a parity price, the only mark-up to the European price will be the export duty and the cost of transportation that, given the current gas price, will be about 100 U.S. dollars,” Medvedev said.

He confirmed that “we have agreed practically on everything” with China and “there is only one point left. After that we will be able to start implementing our construction and upstream projects in Russia, and our Chinese partners will in turn start working on their part of the project,” he said.

At the same time, he admitted that some disagreements remain. “We have our arguments and I am sure that the Chinese side will take them into account,” Medvedev said.

Gazprom insists that Russian gas be initially supplied to China via the “western corridor”.

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.

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.

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