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Energy minister confirms gas price for China at $350 per 1,000 cu. m

May 23, 2014, 12:55 UTC+3
Alexander Novak also confirmed that the volume of natural gas supplies to China under the contract exceeds 1 trillion cubic meters within 30 years
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Russian Energy Minister Alexander Novak

Russian Energy Minister Alexander Novak

© ITAR-TASS/Gennady Khamelyanin

ST. PETERSBURG, May 23. /ITAR-TASS/. The gas price for China under the signed 30 years contract in nearly $350 per 1,000 cu. m, Russian Energy Minister Alexander Novak told the Rossiya 24 TV news channel on Friday.

“Yes, these are prices close that in the contract,” he answered to a question if media reports saying the gas price for China amounts to $350 are true.

The minister also confirmed that the volume of natural gas supplies to China under the contract exceeds 1 trillion cubic meters within 30 years.

Earlier on Friday, Gazprom Export CEO Alexander Medvedev said that Gazprom and China National Petroleum Corporation (CNPC) preliminarily agreed on $25 billion advanced payment on the gas contract.

 

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.

The contract

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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