Russia, China Agree on Gas Supplies

Russia and China are close to sealing the much awaited gas contract.

Russia’s Gazprom and the China National Petroleum Corporation (CNPC) signed an agreement in Saint Petersburg on Thursday, outlining the major terms and conditions of pipeline gas supply from Russia to China via the eastern route.

All the major terms and conditions of future Russian natural gas supplies to the Chinese market via the eastern route were agreed on, namely, the export volume and starting date, the take-or-pay level, the period of supply buildup, the level of guaranteed payments, the gas delivery point on the border as well as other basic conditions of gas offtake. The price conditions will not be linked to the Henry Hub index.

Russia will supply at least 38 billion cubic meters of gas per year to China.

Gazprom reported that the deal is expected to be finalized by the start of 2014. The project also envisages the construction of a new Russian pipeline to China by 2018.

The two sides have consistently failed to agree on the issue of price for years, prompting China to sign massive gas deals with other exporting nations including Australia, Qatar, and Turkmenistan, RIA Novosti reported.