Gazprom, CNPC sign memorandum on eastern route pipeline gas supplies to China
MOSCOW. March 22 (Interfax) - Gazprom CEO Alexei Miller and CNPC chief Zhou Jiping signed a memorandum in Moscow on Friday on the project to deliver Russian pipeline gas to China on the so-called eastern route, an Interfax correspondent reported.
The signing ceremony took place in the Kremlin in the presence of Russian President Vladimir Putin and Chinese President Xi Jinping.
The memorandum sets out the main parameters of the contract, clearing the way for an agreement on price.
The contract will be for 30 years, Gazprom said. "The document that was signed is strategic and long-term in nature, defines the parameters for deliveries of Russian gas to China on the eastern route and lays the groundwork for a 30-year gas delivery contract."
Plans are to sign the contract before the end of the year.
The Power of Siberia pipeline will link the Chayanda field in Yakutia to Vladivostok, where LNG capacity is to be built. There is already a pipeline from Sakhalin to Vladivostok with capacity to ship 6 billion cubic meters of gas a year, which will subsequently be upgraded to 30 bcm a year. Later the Power of Siberia pipeline will be extended to the Kovykta field in Irkutsk region.
Gazprom has been negotiating deliveries of Russian gas to China for almost 10 years. It initially planned to deliver gas to China on the western route: 30 bcm a year from Western Siberia on the Altai pipeline for delivery to China's west. But the demand for gas in that part of China was not as great as on its east coast; consequently, China had little desire to pay European-style prices for the gas.
Gazprom decided not to negotiate deliveries on the eastern route (38 bcm a year) until deliveries on the western route were decided. But it changed its position late last year after the final investment decision on development of the Chayanda gas condensate field was approved.
