15 Sep 2009 14:06

Gazprom, CNPC chiefs discuss provisional terms of future gas agreement

MOSCOW. Sept 15 (Interfax) - The heads of Gazprom and China National Petroleum Corporation (CNPC) discussed the provisional terms of a future agreement on gas deliveries from Russia at a meeting in Beijing on Tuesday, Gazprom said in a statement.

"In particular, the parties expressed their unanimous opinion that the fast pace at which Gazprom is implementing the Eastern Gas Program creates favorable conditions for the further development of cooperation in the gas area," the statement says.

The meeting between Gazprom CEO Alexei Miller and CNPC President Jiang Jiemen was held preparatory to Prime Minister Vladimir Putin's visit to China, it says.

The agreement on strategic cooperation between Gazprom and CNPC was signed in Beijing on October 14, 2004 during then-President Putin's visit to China. The agreement provides for cooperation in a broad range of areas associated with Gazprom's gas exports to China. It also covers examination of opportunities for joint projects in gas processing and gas chemicals in eastern Russia and projects in third countries.

The Eastern Gas Program, which is the state program for creating a unified system of gas production, transportation and supply taking into account possible gas exports to China and other countries in the Asia-Pacific Rim, was approved in September 2007 by the Russian Industry and Energy Ministry. Gazprom was appointed the Russian government coordinator for operations under the program.

Gazprom holds more than 40 licenses to hydrocarbon blocks in Eastern Siberia and the Far East. They include the Chayanda field in Yakutia, Chikanskoye in Irkutsk region, Sobinskoye in Krasnoyarsk territory and Kirinskoye on the Sakhalin shelf. In July 2009 Gazprom received the licenses to the Kirinsky, East Odoptu and Ayashsky blocks under the Sakhalin-3 project, as well as the license to the West Kamchatka block.

A priority for the Eastern Gas Program is the Sakhalin-Khabarovsk-Vladivostok gas transportation system. Gazprom began construction of the gas pipeline in July 2009. Once it is completed, construction of the Yakutia-Khabarovsk-Vladivostok gas transportation system will begin.

Russia's first LNG plant began operating at the beginning of 2009 under the Sakhalin-2 project, in which Gazprom is the leading shareholder. Output is being exported. The LNG plant is scheduled to reach design capacity, 9.6 million tonnes a year, sometime in 2010.