9 Nov 2009 06:13

Gazprom, CNPC close in on gas price deal

Beijing. November 9. INTERFAX CHINA - Russia's Gazprom and China National Petroleum Corporation (CNPC) have drawn closer to sealing a deal on prices for Russian gas during talks in Shanghai on Nov. 1 and 2, a source close to CNPC told Interfax.

"We have been drawing our positions nearer and we have reached certain accords on the price. Although we are pleased with the outcome of the current round, the problem persists so far," the source said.

"The parties agreed to continue talks. The next round has been tentatively set for the end of November and it will be held in Kazan," the source said.

A Gazprom delegation led by Deputy CEO Alexander Medvedev held a round of commercial talks with CNPC in Shanghai on Sunday and Monday on Russian natural gas shipments to China.

The delegations discussed prices, volumes, routes and timeframe.

A framework agreement, spelling out terms of Russian gas supplies to China, was signed in October 2009 during Russian Prime Minister Vladimir Putin's visit to Beijing.

The agreement signed was a follow-up to previous accords and it details the basic terms of the future contract.

Gas is to be delivered via two routes with 30 billion cubic meters to be channeled through Western route and 38 billion cubic meters via Eastern route. The Western option could be implemented shortly, given the available and prepared reserves, and a developed infrastructure and gas processing capacities. The document ties the price formula to the oil basket index.

The gas contract could be signed in June 2010, and the first gas could be shipped in 2014-15, Russian officials predict.