#AceFinanceNews – MOSCOW – May 21 – Russian gas monopoly Gazprom will get $25 billion in prepayment from the Chinese National Petroleum Corporation (CNPC) to be allocated for the Sila Sibiri (Power of Siberia) pipeline under the gas supply deal, a source close to Gazprom told ITAR-TASS.
The amount is similar to the earlier announced cost of the pipeline with an annual capacity of up to 38 billion cubic metres.
Construction would start as soon as the contract is signed, said Gazprom’s CEO Aleksey Miller. Gas should first be sold – this is the formula Gazprom had always stuck to, he said.
The companies signed the 30-year contract for gas supplies worth $40 billion to China via the eastern route pipeline on Wednesday.
Miller described the deal as Gazprom’s so far major gas contract but declined to reveal the gas price referring to commercial confidentiality.
The document granted the sides preferential tax regimes, he added.
Russian President Vladimir Putin told journalists in Shanghai works would start on the next day after the deal, as the sides would start to work on the western route for supplies from Western Siberia.
No strong growth in Gazprom stocks is to be expected over the short-term as the contract with China had already been priced in.
The gas holding’s stocks have already rocketed more than 20% from the local low of 122.8 rubles ($3.559 exchange rate fixed at May 21) per stock on April 28 to 149 rubles ($4.3) on Tuesday.
#AceFinanceNews – RUSSIA/CHINA – May 19 – Russia and China are set to sign a long-awaited 30-year gas contract during a two-day meeting, when Russian President Vladimir Putin visits Shanghai on May 20-21.
Gazprom, Russia’s largest natural gas producer, and China National Petroleum Corporation (CNPC) are set to sign a gas deal that will send 38 billion cubic meters of natural gas a year eastward to China’s burgeoning economy, starting in 2018.
The timing is almost flawless as Russia is looking to shield itself from Western sanctions by pivoting towards Asia, and China desperately needs to switch from dirty coal to more environmentally friendly natural gas.
“The arrangements on export of Russian natural gas to China have nearly been finalized. Their implementation will help Russia to diversify pipeline routes for natural gas supply, and our Chinese partners to alleviate the concerns related to energy deficit and environmental security through the use of ‘clean’ fuel,” President Vladimir Putin said.
The deal has been on the table for over 10 years, as Moscow and Beijing have negotiated back and forth over price, the gas pipeline route, and possible Chinese stakes in Russian projects. The gas price is expected to be agreed at between $350-400 per thousand cubic meters.
The deal has been on the table for over 10 years, as Moscow and Beijing have negotiated back and forth over price, the gas pipeline route, and possible Chinese stakes in Russian projects.
The gas price is expected to be agreed at between $350-400 per thousand cubic meters.
” Of course Russia wants to sell gas and resources at the highest possible prices. But because of the sanctions from European partners, we need to find a partner that can buy our gas long-term, which is why at the moment China looks very attractive to us,” Aleksandr Prosviryakov, a partner at Lakeshore International, a Moscow-based asset management firm, told RT at a Confederation of Asia Pacific Chambers of Commerce and Industry (CACCI) in Moscow ahead of the big meeting on Tuesday.
On Sunday, Gazprom chief Aleksey Miller sat down with his CNPC counterpart, Zhou Jiping, in Beijing to discuss final details, including price formulas.
But the sticking point is how to finish the pipeline from Russia to China.
Currently there is one complete gas pipeline that runs throughout Russia to the Chinese border, “Siberian Power” which Gazprom broke ground on in 2007, three years after Gazprom and CNPC signed a strategic cooperation agreement in 2004.
The pipeline stretches across Russia’s Far East and after extension to China, it will deliver gas to the country’s populous north, near Beijing.
“Now is the time for Russia to compromise a little bit so that they can lessen their dependence on Western Europe as a buyer of Russian gas. Diversification is a strategy for Russia to have good long-term business relationships with both Europe and China,” Benedicto Yujuico, president of the Confederation of Asia-Pacific Chambers of Commerce and Industry, told RT at an Asian business gathering in Moscow on Wednesday.
A record amount of agreements are expected to be signed at the working meeting between Russia and China. Already 30 out of the 43 prepared agreements are expected to be inked, according to presidential aide Yury Ushakov, as reported by RIA Novosti.