Russia, China agree terms for multibillion dollar gas deal

Russia, China agree terms for multibillion dollar gas deal

PanARMENIAN.Net - Russia and China on Thursday, September 5 said that they had made progress towards agreeing a mega deal for the delivery of Russian gas to its energy-hungry eastern neighbour, AFP reported.

Russian gas giant Gazprom and China's state energy firm signed an agreement after a meeting between Presidents Xi Jinping and Vladimir Putin ahead of the G20 summit in Saint Petersburg on the "fundamental conditions" for the gas delivery.

Gazprom's chief executive Alexei Miller said he hoped the final deal -- which has been negotiated for several years already -- could be signed by the end of the year.

The deal envisages Russia pumping 38 billion cubic metres of gas to China from 2018, a major change from the Russian firm's current orientation towards European export.

"Everything has been agreed, except the price," a source close to Gazprom informed. The price has been the main sticking point for years in the talks.

According to RIA Novosti, the two sides have been negotiating the issue for years, and consistently failing to agree the price issue, while China has gone ahead with signing massive gas supply deals with other supplier nations including Australia, Qatar and Turkmenistan.

The final achievement of an agreement on the specifics of the Gazprom deal comes just a day after China's President Xi opened the world's second-largest gas plant in neighboring Turkmenistan that will send at least 25 billion cubic meters a year of the fuel to Beijing, according to its operator Turkmengaz.

CNPC also signed a deal to acquire a 20 percent stake in the Yamal liquid natural gas (LNG) plant from Novatek, Russia’s biggest independent gas producer.

The deal, first announced in June, also saw Novatek agree to deliver at least 3 million tons of natural gas a year to China. The Russian company said in a statement it expects that deal to be finalized by December, providing it is approved by Russian state regulators.

Novatek remains the main shareholder in the Yamal liquefied natural gas plant, due to open by 2016, though the company plans to sell another 9-percent stake in the project, bringing its own share to 51 percent. France’s Total also owns 20 percent.

Russia's state-owned high-tech corporation Rostec and the state-owned China Aerospace Science and Technology Corporation also signed a strategic cooperation agreement following the Putin-Xi meeting.

Russia’s state-run oil company Rosneft was also expected to sign a deal with CNPC at the G20 forum on construction of an oil refinery in the Chinese city of Tianjin, but failed to do so.

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