Russia Aims To Sign Chinese Gas Deal Next Month

Russia and China are “very close” to agreeing on a multi-billion dollar natural gas contract, which will see state-owned energy company Gazprom supply Beijing with as much as 38 billion cubic metres of gas a year, claimed deputy prime minister Arkady Dvorkovich on Wednesday.

The deal, likely to run for 30 years, follows at least a decade of negotiations; and comes just as Moscow is embroiled in a political standoff with its current largest customer, the European Union, over Ukraine.

Russia and China are “very close” to agreeing on a multi-billion dollar natural gas contract, which will see state-owned energy company Gazprom supply Beijing with as much as 38 billion cubic metres of gas a year, claimed deputy prime minister Arkady Dvorkovich on Wednesday.

The deal, likely to run for 30 years, follows at least a decade of negotiations; and comes just as Moscow is embroiled in a political standoff with its current largest customer, the European Union, over Ukraine.

Dvorkovich said that the deal could be signed as early as next month, when President Vladimir Putin is scheduled to travel to Beijing.

Gazprom Chief Executive Officer Alexey Miller was also in Beijing on Wednesday to meet China National Petroleum Corp. Chairman Zhou Jiping in order to discuss the final details of the contract.

“Regarding Gazprom’s gas contract, the sides are close to agreement … The only issue remaining is … the price,” said Dvorkovich, as cited by Reuters.

[quote]”We really hope that the contract will be signed in May,” he said.[/quote]

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Sources say Gazprom is pushing for a price of $10-$11 per mmBtu (million British thermal units) from China – around what Europe currently pays.

China on the other hand is looking to pay a similar amount to what it pays former Soviet State Turkmenistan – at around $9 per mmBtu.

Gazprom’s Alexey Miller said that talks on the gas price were at an “advanced” stage, pointing to a framework agreement signed in 2009, where the major terms and conditions were already agreed on.

 

Meanwhile, Russian Prime Minister Dmitry Medvedev has suggested making the Ukraine pay in advance for its gas. Ukraine owes Gazprom $2.2 billion for gas and failed to meet a deadline this week for paying its March gas bill.