Putin, Xi Jinping sign mega gas deal on second gas supply route

President Vladimir Putin and Chinese leader Xi Jinping have signed a memorandum of understanding on the so-called “western” gas supplies route to China. The agreement paves the way for a contract that would make China the biggest consumer of Russian gas.
Russia’s so-called “western” or "Altay" route would supply 30 billion cubic meters (bcm) of gas a year to China.
The new supply line comes in addition to the “eastern” route, through the “Power of Siberia” pipeline, which will annually deliver 38 bcm of gas to China. Work on that pipeline route has already begun after a $400 billion deal was clinched in May. 


“After we have launched supplies via the “western route,” the volume of gas deliveries to China can exceed the current volumes of export to Europe,” Gazprom CEO Aleksey Miller told reporters, commenting on the deal. 

Speaking to journalists on the eve of his visit to Beijing, Putin was optimistic about prospects for the new gas deal with China.
“We have reached an understanding in principle concerning the opening of the western route,” Putin said. “We have already agreed on many technical and commercial aspects of this project, laying a good basis for reaching final arrangements.”
The “western” route deal is one of the 17 agreements signed at the Sunday meeting between Putin and Xi.
They also included a framework agreement between Gazprom and China’s CNPC on gas deliveries and a memorandum of understanding between Gazprom and another Chinese energy giant, CNOOC.
Gazprom and CNPC have also signed a preliminary agreement for China National Oil and Gas Exploration and Development to take a 10 percent stake in Russia's Vancorneft.
Among the business issues discussed by Putin and Xi at their fifth meeting this year was the possibility of payment in Chinese yuan, including for defense deals military, Russian presidential spokesman Dmitry Peskov was cited as saying by RIA Novosti........http://rt.com/business/203679-china-russia-gas-deal/
9/11/14
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• China, Russia start construction of gas pipeline (the Sila Sibiri pipeline)

• Gazprom to receive $25 billion prepayment for gas supplies to China

• Putin praises Gazprom, CNPC deal on Russian gas for China

China, Russia start construction of gas pipeline (the Sila Sibiri pipeline)

China and Russia on Monday started the construction of a joint natural gas pipeline in Russia's eastern Siberia, in implementation of a natural gas supply contract signed between the two countries.

Chinese Vice Premier Zhang Gaoli and Russian President Vladimir Putin jointly witnessed the welding of the first roll of pipes on the Russian part of the China-Russia East Route natural gas pipeline in Yakutsk, the capital city of Russia's Sakha (Yakutia) Republic.

At a start-of-construction ceremony at the Us-Khatyn field in the outskirt of Yakutsk, Zhang and Putin were joined by people from both countries as live video signals from the Chayandin gas field some 1,000 km away was displayed on huge screens.

The Chayandin and Kovyktin gas fields in eastern Siberia will become major sources of supply when the pipeline begins to pump natural gas to China in 2018.

The start of construction of the Russian part of the China-Russia East Route natural gas pipeline signifies a major step forward in implementing the consensus reached between Chinese President Xi Jinping and Putin.

During their meeting in Shanghai in May this year, the presidents witnessed the signing of a number of land-breaking contracts between companies of the two countries, including gas supplies and an annual supply of 3 million tons of liquified natural gas.

The Russian part of the joint-venture pipeline, which starts at the Kovyktin and the Chayandin gas fields, will extend through existing pipelines in eastern Siberia and end in the Far East port city of Vladivostok.

The China-Russia East Route natural gas pipeline will be jointly built by China National Petroleum Corporation (CNPC) and Gazprom of Russia, with the latter responsible for building the part within Russian borders.

The Russian part of the pipeline, officially named "the Power of Siberia" pipeline, has a designed capacity of transmitting 61 billion cubic meters of natural gas every year.

According to a CNPC-Gazprom contract, the Russian side will export 38 billion cubic meters of gas to China through the pipeline every year for a 30-year period starting from 2018.

Fast growing energy cooperation has become a core ingredient of China-Russia comprehensive strategic cooperative partnership and has helped advance it into a new era of development. In addition to the East Route gas pipeline, the two countries are in negotiations on the construction of the West Route gas pipeline.

Under the CNPC-Gazprom agreement, the Russian side will export 70 billion cubic meters of natural gas to China every year upon completion of both the East- and West-Route gas pipelines.

The two sides have also jointly built and put into operation a China-Russia oil pipeline in the Far East. In 2013, China imported 24.35 million tons of crude oil, 27.28 million tons of coal and 3.5 billion kwh of power from Russia.

Russian Deputy Prime Minister Arkady Dvorkovich said earlier this year that Russia has the capacity of tripling or quadrupling the current volume of electricity and coal exports to China.

The CNPC and Russia's oil giant Rosneft will build a joint-venture oil refinery in Tianjin in north China, which will be able to process 16 million tons of crude oil every year.

In the field of nuclear energy, the China-Russia joint venture Tianwan nuclear power plant in east China already has two reactors put into trial operation, and the other two are under construction.

Xi and Putin have agreed to "establish a comprehensive energy cooperation partnership" during their meeting in May, Gazprom Chairman of the Board of Directors Alexey Miller said Saturday.

"We are making all-out effort to implement the consensus reached between President Putin and President Xi Jinping," Miller said.
Xinhua -   china.org.cn
1/9/14
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Related:

• China, Russia work on building energy cooperation partnership

• Gazprom to receive $25 billion prepayment for gas supplies to China

• Putin praises Gazprom, CNPC deal on Russian gas for China

Gazprom to receive $25 billion prepayment for gas supplies to China

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........[itar-tass.com]
21/5/14
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Related:

• Putin praises Gazprom, CNPC deal on Russian gas for China

• Implementation of gas contract with China to begin on May 22 - President Putin...

Putin praises Gazprom, CNPC deal on Russian gas for China

Russian investments into the infrastructure for transporting gas to China, compressor stations will total $55 billion, according to Gazprom CEO Alexei Miller...

The price of Russian natural gas for China under bilateral contract signed on Wednesday is based on the market price on oil and oil products, Russian President Vladimir Putin said.

Russian energy giant Gazprom and China National Petroleum Corporation signed a contract on Wednesday on Russia’s gas deliveries to China. The contract was signed in the presence of President Putin and his Chinese counterpart Xi Jinping.

Russian investments into the infrastructure for transporting gas to China, compressor stations will total $55 billion, according to Gazprom CEO Alexei Miller.
Russian gas supplies to China via the eastern route may begin in four to six years’ time, Energy Minister Aleksandr Novak told the media.

The gas price formula for China is developed similar to that for Europe, Russian President Vladimir Putin told reporters in this Chinese city on Wednesday. “The gas price formula as in other our contracts is pegged to the market price of oil and oil products,” Putin said.
“This is linked to it as a formula of computing the price for European consumers. This is a formula which is pegged to the market price of oil and oil products,” Putin said.
The Russian president called the reached agreements on Wednesday as the largest ever in the history of the Russian and Soviet natural gas sector.

He said it would take four years to implement the contract, while investments into the project would exceed $70 billion both from China and Russia.

Putin added that Russia and China began joint work on the development of the western route of natural gas supplies to China with possible diversification of the route.
The major contract signed on Wednesday was negotiated for several years. Gazprom expected to get $400 as a starting price for 1 thousand cu. m. of gas for China. The Chinese side wanted to buy gas for $350-360.

The price of Russian gas for China would be no less than $400 for 1,000 cubic meters, an expert of the Eurasian Development Research Center of the Chinese State Council said in April. Inclusive of infrastructure costs, supplies to China would cost no less than $400 for 1,000 cubic meters, given Russia’s export price of $380 for 1,000 cubic meters, he said.
Deputy Director of the Institute of Energy Strategy Alexei Belogoryev then estimated the contract price at $350-400 for 1,000 cubic meters. Director of the Energy Development Fund Sergei Pikin predicted a price of about $380.
 [itar-tass.com]
21/5/14
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Related:

• China-Russia natural gas deal on the way

• Negotiations ongoing for long-awaited gas deal. - Xi, Putin vow to push ties to ‘new phase’

China-Russia natural gas deal on the way

Russia has agreed to "finalize" a prolonged negotiation on natural gas with China in a meeting between the leaders of the two countries on Tuesday.

According to a joint statement, the two countries will "establish a comprehensive energy cooperation partnership". The deal is still pending, despite of the huge progress claimed in the protracted negotiation. Sinopec, China's top oil refiner, signed a framework agreement about the east route of the natural gas project with Russia's Gazprom, the world's largest gas company, in September of 2013.

The east route pipeline is scheduled to start providing China with 38 billion cubic meters of natural gas annually from 2018. Feng Yujun, an expert on Russia with the China Institute of Contemporary International Relations, said that the key hinderance is price.

"Whether the natural gas price will be linked to the oil price or to liquefied natural gas (LNG) is still not settled," Feng said.

Liu Yijun, professor with China University of Petroleum, believes the deal will affect the pricing systems of other projects in the Asian-Pacific region. "The huge supplies from Russia and vast demands from China do not make for a quick and easy agreement," Liu said.

Natural gas has become an important option for China's sustainable development. Consumption of natural gas stood at 167.6 billion cubic meters in 2013, up 13.9 percent year on year, while the natural gas imports rose 25 percent from a year ago.

The new popularity of shale gas has reduced Russia's exports to Europe, which forced Russia turned its strategy to the Asian-Pacific market.

Chen Weidong, senior energy researcher with China National Offshore Oil Corporation, said that the global energy structure is changed as the United States became a natural gas exporter, Iraq saw larger oil production and China stressed development of shale gas and coal bed gas.

Liu suggests a new cooperation method rather than being entangled in the pricing mechanism, such as exploring breakthroughs from the entire industry chain.

"The energy partnership reflects the wishes for energy cooperation," Feng added, "but the final price will be determined by the market." 
  [globaltimes.cn]
21/5/14
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• Negotiations ongoing for long-awaited gas deal. - Xi, Putin vow to push ties to ‘new phase’

Negotiations ongoing for long-awaited gas deal. - Xi, Putin vow to push ties to ‘new phase’

Chinese President Xi Jinping and Russian President Vladimir Putin's meeting Tuesday yielded a "substantial" joint statement, which vowed to push the all-round strategic partnership to a "new phase," though the two countries have yet to finalize a key gas supply agreement.

The trip to Shanghai marks Putin's first state visit to China after Xi took office last year.

Following their meeting, the two leaders witnessed the signing of a series of deals in fields including trade, energy, aviation and aerospace.

A comprehensive energy partnership was highlighted in the joint statement signed by Xi and Putin, as the two agreed to jointly develop coal mines in Russia and consider jointly building power plants in Russia to increase power supply to China.

• Russia's second largest gas producer Novatek signed an annual 3 million-ton liquefied natural gas deal with China National Petroleum Corp (CNPC) on Tuesday.

• However, the two sides failed to seal a highly anticipated gas supply deal between Gazprom and CNPC Tuesday, which was widely considered to crown the visit.

The deal, once settled, will see 38 billion cubic meters of natural gas piped annually from Russia to China for 30 years, and is seen as Russia's attempt to transfer its energy export focus away from Europe under the current tension.

With the price for gas still the major obstacle, a compromise is being sought so "the contract can be signed on a mutually beneficial basis," Gazprom CEO Alexei Miller said Tuesday, according to a Gazprom press release.

Senior Russian leaders, including Prime Minister Dmitry Medvedev and Energy Minister Alexander Novak, Tuesday both denied political concerns behind the gas deal, stressing its long-term strategic significance with China.

"Today, I wouldn't look for politics behind this, but I have no doubt that supplying energy to the Asia-Pacific region holds out a great promise in future," Medvedev said in an interview with Bloomberg Television.

Although an important move, energy agreements do not equate with politics and it is still acceptable if the gas deal is not signed during Putin's visit. The two sides have agreed to seal it by the end of the year under Russia's inevitable energy diversification trend, said Wang Xianju, a professor with the Development Research Center of the State Council.

Russia will make decisions on the gas price after weighing the economic influences caused by Western sanctions, said Li Xing, a professor of Russian studies with Beijing Normal University.

The joint statement also stressed security cooperation under the complicated and changing regional and international situations to safeguard stability in the two countries and in the Asia-Pacific region.

The Chinese and Russian militaries should deepen cooperation in joint drills, training and the fight against terrorism, Xi said.

Such emphasis on defense issues signals a high stage of political mutual trust between the two powers, especially when the two leaders personally attended a joint naval exercise in the East China Sea on Tuesday after the talks, said Wang.

"Previous drills only saw military leaders present from the two nations. Military cooperation is the most sensitive area that symbolizes the level of political trust," said Wang, noting the drill location also indicates Russia's support and recognition of China's Air Defense Identification Zone in the East China Sea.

The two countries will jointly commemorate the 70th anniversary of World War II along with other allies.

Observers said such security cooperation will help improve regional stability when the two permanent members of the UN Security Council support each other in major regional issues, including the post-war order.

Russian Ambassador to China Andrey Denisov told the Global Times earlier that he believes bilateral relations will only continue to improve.

When asked if Putin's visit is viewed as a signal for Russia's strategic incline to the Asia-Pacific region, Denisov said "yes and no." 

 "The current complicated international situation encouraged China and Russia to boost cooperation, but we will strengthen the partnership no matter [if Western] sanctions exist as we have reached a significant height," Denisov said.

The statement also urged all parties concerned in the Ukraine crisis to exercise restraint, avoid escalating the conflict and seek a peaceful and political settlement for the current problems.
 [globaltimes.cn]
20/5/14
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Related:

• Gazprom to sign monumental gas deal with China

Gazprom to sign monumental gas deal with China

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. 

“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........rt.com
19/5/14
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Related:

• Gazprom: Η σύμβαση που θα υπογράψουμε με την Κίνα θα είναι συμφέρουσα για τη Ρωσία

• Gas deals expected during Putin's China visit 

• Ukraine Ready to Pay Russia $4 bln by End of May for Gas. - Gazprom to cut supplies to Ukraine from June if no prepayment

• Putin’s China visit may seal landmark gas agreement

Gas deals expected during Putin's China visit

Vice Foreign Minister Cheng Guoping said on Thursday that China and Russia are expected to reach agreements on natural gas during Russian President Vladimir Putin's visit to China.

Putin will pay a state visit to China from May 20 to 21 at the invitation of Chinese President Xi Jinping and attend the fourth summit of the Conference on Interaction and Confidence Building Measures in Asia (CICA) in Shanghai.

During their meeting in Sochi, Xi and Putin reached important agreements on gas, and the vast majority of the text of contracts was agreed.

The gaps between the two sides are mainly on price, Cheng said, adding that the companies involved are in negotiations in Moscow. 
[globaltimes.cn]
15/5/14
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Related:

• Ukraine Ready to Pay Russia $4 bln by End of May for Gas. - Gazprom to cut supplies to Ukraine from June if no prepayment

• Putin’s China visit may seal landmark gas agreement

 

Putin’s China visit may seal landmark gas agreement

Russian President Vladimir Putin will next week travel to China for a visit expected to see Moscow and Beijing seal a landmark gas agreement, the Kremlin said on Tuesday.

During the May 20 visit to Shanghai, Putin will oversee the signing of a number of "important agreements" in trade and energy, the Kremlin said without providing further details.

Deputy Prime Minister Arkady Dvorkovich said last month that Russia and China planned to wrap up a decade of talks on supply of Russian natural gas before Putin's China visit.

While Putin visits Beijing, China and Russia will hold a joint naval drill in the northern part of the East China Sea between May 20 and 26, a spokesman for the Chinese navy announced on Tuesday.

Liang Yang told a press conference that the "Joint Sea 2014" drill will focus on defense and attack, escorts, search and rescue and the freeing of hijacked ships.

Liang revealed that the two sides will dispatch a total of 14 vessels, two submarines, nine fixed-wing aircraft as well as helicopters and special forces for the exercise.

According to the spokesman, the event is a key measure for China and Russia to strengthen mutual political trust and for the two armies to deepen cooperation.

The drill aims to boost their capabilities to jointly cope with maritime security threats and will not target any third party, he added.

On May 21, Putin will take part in the fourth summit of the Conference on Interaction and Confidence Building Measures in Asia scheduled to be held in Shanghai.
[globaltimes.cn]
13/5/14