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Gazprom, CNPC agree on $25 billion advanced payment on gas contract

May 23, 2014, 10:06 UTC+3 ST. PETERSBURG
The price of Russian natural gas supplies to China under a landmark gas deal signed on Wednesday will equal about $350 per 1,000 cubic meters
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Gazprom Export CEO Alexander Medvedev

Gazprom Export CEO Alexander Medvedev

© ITAR-TASS/Sergei Fadeichev

ST. PETERSBURG, May 23. /ITAR-TASS/. Russian energy giant Gazprom and China National Petroleum Corporation (CNPC) preliminarily agreed on $25 billion advanced payment on the gas contract, Gazprom Export CEO Alexander Medvedev told reporters on the sidelines of the St. Petersburg International Economic Forum on Friday.

On Thursday, Russian Economic Development Minister Alexei Ulyukayev has disclosed the price set for China under the landmark gas contract signed May 21. According to the minister, it will be about $350 per 1,000 cubic meters.

“Gazprom representatives said that the price of deliveries is a commercial secret. In my estimates, it will stand at about $350,” Ulyukayev said in an interview with Bloomberg TV. The price is lower than the average gas price for the EU.

Gazprom and China National Petroleum Corporation (CNPC) signed a 30-year contract on Russian natural gas supplies to China via the eastern route worth a total of $400 billion. The document was signed in the presence of Russian President Vladimir Putin and his Chinese counterpart Xi Jinping.

Infographics Supplies of Russian natural gas to China Supplies of Russian natural gas to China
May 21, 2014, Gazprom and CNPC have signed a deal on gas supplies to China
Gazprom CEO Alexei Miller said the deal envisaging the supply of 38 billion cubic meters of natural gas to China annually was the largest contract for the Russian energy giant.

Putin said after the signing ceremony that Russia and China would also start to work on the western route of natural gas deliveries to China from Western Siberia.

Preferences on MET

The Russian government may introduce preferences on the mineral extraction tax (MET) for producers of gas to be supplied to China only after a thorough discussion, Ulyukayev added.

On Wednesday, Gazprom CEO Alexei Miller said that the deposits producing gas to be supplied to China will have MET preferences.

“This issue must be discussed. I think that the Finance Ministry will have a different point of view,” Ulyukayev said.

The minister also said that the supplies to China will be profitable.

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