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Gazprom, CNPC discuss gas supplies to China

September 27, 2012, 23:41 UTC+3
Earlier China said this route was less acceptable for supplies because of its higher transportation costs
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MOSCOW, September 27 (Itar-Tass) —— Gazprom and China National Petroleum Corporation (CNPC) discussed the terms of Russian pipeline natural gas and LNG to China.

Gazprom CEO Alexei Miller and CNPC President Zhou Jiping on Thursday, September 27, focused on the results of surveying work for the Altai gas pipeline and noted that its construction would help meet growing demand for energy resources in China.

Earlier China said this route was less acceptable for supplies because of its higher transportation costs.

“We took a step forward,” Miller said after the meeting.

The Altai project calls for building a gas pipeline for supplying of natural gas from Western Siberia to China through the western section of the Russian-Chinese border. The pipeline will run through six Russian regions: Republic of Altai, Altai Territory, Novosibirsk region, Tomsk region, Yamalo-Nenets Autonomous Area, and Khanty-Mansi Autonomous Area.

The construction of the Altai gas pipeline will start only after signing a gas purchase agreement with China.

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.

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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