Gazprom starts supplying gas to China at about $200/thousand cubic meters
TOMSK/MOSCOW. April 13 (Interfax) - Gazprom has begun supplying gas to China via the Power of Siberia pipeline at a price of around $200 per thousand cubic meters, the Chinese General Administration of Customs and the Russian Federal Customs Service (FCS) said.
According to Chinese customs data, Gazprom supplied 635 million cubic meters of gas to China at $129.154 million in January and February; therefore, the average cost of gas exported for this period, according to the FCS, was $203 per thousand cubic meters.
A decrease is expected in the current price in the future, given that the contract to supply gas via the Power of Siberia pipeline is tied to the price of fuel oil and gasoil with a nine-month lag.
Going in the western direction, according to the FCS, the price of Gazprom's exported gas, excluding Belarus, was $201 per thousand cubic meters in December 2019; $168 per thousand cubic meters in January 2020; and $145 per thousand cubic meters in February.
At Gazprom's Investor Day in New York in February of this year, Gazprom Export CEO Elena Burmistrova once again said that the price of the Chinese contract was a corporate secret: "We are often asked about the price of gas that is written in the contract between Gazprom and the China National Petroleum Corporation. Unfortunately, however, we have not disclosed the price parameters, as the terms of the contract stipulate that this is a commercial secret."
Burmistrova agreed to comment on the price level via comparison with rival supplies. Her presentation referred to the December study of Wood Mackenzie, Cost+ Estimates in the Target Chinese Regions.
"Power of Siberia will compete with central Asian gas supplies only in the north and east of China. Central Asian gas is not supplied to the northeast. According to independent analysts, Russian gas supplies will be more attractive compared with gas deliveries from central Asia to both regions owing to several factors, including a shorter transport leg. As for the other alternative source of import supplies, LNG, then only in the east in the Shanghai area, will gas under new contracts, which will be signed in conditions of low prices on the market, be able to compete with supplies via the Power of Siberia pipeline. This means that gas from Russia will be among the most popular sources of imports in the targeted regions of the country," Burmistrov said.