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Gazprom inks deal to supply 30 Bcm/yr of gas to China

Gazprom inks deal to supply 30 Bcm/yr of gas to China

Shanghai: Russian gas giant Gazprom said Monday it has signed a legally binding document with China National Petroleum Corp on the key terms for future supplies of Russian gas, writes Platts. The agreement stipulates gas deliveries of 30 billion cubic meters/year over 30 years.

 While the document signals a major advance in the long-lasting talks, the most tough negotiations on the gas price and sourcing are still to be had prior to the signing of a final export contract, analysts said. The gas delivery price has been a key stumbling block since talks started in 2004.

The document, dubbed the Extended Basic Terms for Supplies of Gas from Russia to China, was signed by Gazprom CEO Alexei Miller and CNPC President Jiang Jiemin during a visit to Beijing by Russian President Dmitry Medvedev. "The document specifies the key commercial parameters of the planned supplies of Russian natural gas to China's market via the [so-called] western route, including the volumes and the timeframes for the start of exports, the take-or-pay level, and the period for increasing the supplies," Gazprom said in a statement.

The export contract is expected to be signed in the middle of 2011, with the start of supply planned for the end of 2015, it said. In 2006, the two agreed to build two gas pipelines, dubbed the Altai system. At the time, the plan targeted shipping 30 Bcm/year of gas from western Siberia and some 38 Bcm/year from eastern Siberia.

Earlier in the day, Russia's Deputy Prime Minister Igor Sechin said that Russia was ready to meet China's entire demand for natural gas, which amounts to 90 billion cubic meters/year, while Gazprom's deputy CEO Alexander Medvedev said that the export contract, which will include the volumes, routes and price was to be signed "no later than July 1, 2011."  [28/09/10]


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