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Gazprom Export expects progress in China talks on ‘western route’ contract

September 08, 2017, 12:07 UTC+3

China has recently released an updated plan on energy development, which particularly implies an adjusted ratio of the energy balance components

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VLADIVOSTOK, September 8. /TASS/. Gazprom Export expects intensive talks with China on Russian gas supplies via the so-called ‘western route," the company’s Director General Elena Burmistrova told TASS.

She added that China has recently released an updated plan on energy development, which particularly implies an adjusted ratio of the energy balance components.

"The share of natural gas will be growing quite fast until 2030. That is why our Chinese partners are currently studying those plans and starting to change their energy balance. Thus, a new niche is opening for us. Obviously I hope that we will be able to intensify our talks, including regarding the future of the ‘western route’," she said.

When asked whether the talks will intensify as a result of this Burmistrova said: "I admit it as possible."

She also stressed that there have been no halts in the talks with Chinese partners.

"We have been in contact with the partners since 2007. Of course, in 2014, the talks accelerated prior to the signing of the ‘eastern route’ contract. Technical experts have been in contact (with each other - TASS) on a regular basis. We associate with our colleagues on commercial issues as well, discuss potential supplies, including LNG. That is why, the talks will surely continue," Director General said.

Meanwhile, she refused to say when the talks would be finalized.

"New guidelines for China’s energy were published a short while ago, so our colleagues have much to do now. Experts responsible for drafting pipeline projects have assessed the regional demand for gas supplies, since it is connected with ambitious investment programs they will be forced to reevaluate the existing market. Currently our partners are exploring new opportunities emerging due to new plans. I assume that they will be seeking new possibilities to acquire additional volumes of gas from various suppliers. I mean both LNG and pipeline gas. But in case of pipeline gas we as neighbors have a natural geographic advantage," she said.

Currently, Gazprom is building the Power of Siberia gas pipeline, which will pump natural gas from the giant Chayanda oil and gas condensate deposit in Yakutia and the Kovykta gas condensate field in the Irkutsk Region in Eastern Siberia to deliver gas to the domestic market (via Khabarovsk to Vladivostok) and further on for exports to China. The pipe's section aimed for China will be built near Blagoveshchensk. The eastern route stipulates the supply of 38 billion cubic meters of natural gas to China annually within 30 years.

In 2017, Gazprom’s investment in the Power of Siberia pipeline increased to 158.811 billion rubles ($2.7 bln) from 76.162 billion rubles ($1.3 bln) .

The terms of the partnership in design, construction and operation of the cross-border zones of the gas pipeline are defined by an intergovernmental agreement dated October 13, 2014

In 2015, Gazprom and CNPC signed an agreement on the basic conditions of pipeline gas deliveries from Western Siberia to China via the "Western" route (Power of Siberia-2 pipeline). Initially supplies are envisaged at 30 billion cubic meters of gas per year.

Also in 2015, Gazprom and CNPC signed a memorandum of understanding on the project of pipeline shipments of natural gas to China from Russia’s Far East.

On June 25, 2016, Gazprom and CNPC signed a memorandum of understanding on gas storage and power generation in China.

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