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Gazprom-CNPC gas compromise estimated at $75 billion

Experts say Gazprom expected a base price of $400 for 1,000 cubic meters, while the China's offered $350-360 for 1,000 cubic meters

MOSCOW, May 20. /ITAR-TASS/. Compromise between Russian gas export monopoly Gazprom and Chinese National Petroleum Corporation (CNPC) on Russian gas price is estimated at $75 billion, Deputy Head of the National Energy Security Fund Alexei Grivach told ITAR-TASS.

The differences on the price for 38 and 60 billion cubic meters supplies a year were $1.5 billion and $2.5 billion, he added, so the subject of the negotiations is quite a significant one.

“The negotiations are not ceasing, the sides are seeking a compromise. The contract can be signed on a mutually beneficial basis,” Gazprom’s CEO Alexei Miller said on Tuesday.

Gazprom expected a base price of $400 for 1,000 cubic meters, an expert of the Eurasian Development Research Center of the Chinese State Council said in April, whereas the CNPC’s proposal was $350-360 for 1,000 cubic meters.

He declined to estimate the contract price, saying this was a purely commercial issue to be negotiated by the two companies. Inclusive of infrastructure costs, supplies to China would cost no less than $400 for 1,000 cubic metres, given Russia’s export price of $380 for 1,000 cubic metres, he said.

Deputy Director of the Institute of Energy Strategy Alexei Belogoryev then estimated the contract price at $350-400 for 1,000 cubic meters. Director of the Energy Development Fund Sergei Pikin predicts a price of about $380.

According to Grivach, the average price for LNG imported to China is now $450, whereas the old contracts stipulate a price of $200, which means the latest agreements have been concluded at a very high price of $700-800.

Gazprom is planning a 30-year contract to supply 38 billion cubic meters of gas to China.