Gazprom, CNPC Mull New Route

The CEOs of Gazprom and China National Petroleum Corp made progress with their plans for a new gas pipeline route, during a meeting in Beijing December 21.

Gazprom, in its statement, did not identify this new route, but in the past it has planned a so-called western route, which takes gas from western Siberia down to China across the short border they share between Mongolia and Kazakhstan. The attraction would be to allow Gazprom to develop gas reserves in western Siberia for either European or Chinese markets.

“Today we laid the foundations for the creation of another pipeline route for delivering Russian gas to China,” Miller said: “The project opens up new possibilities to meet growing demand for gas in China.”

Gazprom also said that Alexei Miller and CNPC chief Wang Yilin recognised the importance of their co-operation in the gas sector, and the two companies were working successfully on the eastern route for eastern Siberian gas supplies to China.

Both sides are actively discussing partnership in a number of other areas, including underground storage, gas-fired power generation, and gas as a transport fuel. The two signed an agreement on the key conditions for gas supplies through the eastern route that cover the volume, contract length, the start-up and build-up period and the border crossing point. The parties intend to sign the contract next year.

The parties also signed a co-ordination agreement, an annex to the sales and purchase agreement for the eastern route which covers the accounting period for deliveries. As in the past, no reference was made to the gas price formula.