Gazprom, CNPC proceeding to commercial negotiations on supply of Sakhalin gas to China
MOSCOW. Feb 15 (Interfax) - Gazprom and China National Petroleum Corporation (CNPC) are shifting from technical to commercial negotiations on supplies of Russian gas to China from the Far East, Gazprom's press service reported following talks between Gazprom CEO Alexei Miller and CNPC board chairman Wang Yilin.
"The project to supply pipeline gas from the Far Eastern region is a supplement and expansion of the eastern route. The sides summed up the study of the main technical issues and today reached agreement to shift to the commercial stage of negotiations on the project," Gazprom said.
Gazprom and CNPC signed a sale and purchase agreement on Russian gas via the Power of Siberia pipeline, the 'Eastern Route' in 2014. An agreement was made to supply 38 billion cubic meters (bcm) a year for a period of 30 years. The partners also signed an agreement on the main terms for supplying gas via the Power of Siberia 2 pipeline, the 'Western Route' in 2015 and a memorandum on a project to deliver pipeline gas to China from Russia's Far East.
Natural gas production in China totaled 137.1 bcm in 2016, imports rose 22% to 75.2 bcm (52% of it pipeline gas), consumption increased 7% to 205.8 bcm. The share of natural gas in China's energy balance is currently 6%, coal - 67%, oil 19%, non-fossil fuel sources - 13%. The plan of China's State Council envisages an increase in the share of natural gas to 8.3%-10% by 2020 and to 12%-15% by 2030. Consistent with the target figures, a plan to develop the gas industry in China in the thirteenth five-year plan to 2020 could see the aggregate volume of natural gas supplies to the Chinese market (domestic production and imports) reach 360 bcm, gas generation capacity - 110 GW (5% of total capacity), gas transportation system length - 104,000 km and the volume capacity of the underground gas storage facilities should be increased to 14.8 bcm.
"I am sure that the unique experience and colossal capabilities of Gazprom will help China achieve its ambitious plans for developing the country's gas market. This includes providing for gas demand. By 2020, the share of gas in China's energy balance is expected to increase to 6%-10%. Demand for imports by the end of 2020, according to the plan, could double to 150 bcm. We are already completing a gas supply project with CNPC in China on the 'Eastern Route'. Additional pipeline supply projects from the Far East are on the agenda," Alexei Miller is cited as saying in a statement.