Xi, Putin could sign 30-year gas deal in Shanghai

Moscow says agreement is '98per cent ready' after a decade of negotiations over prices

PUBLISHED : Friday, 16 May, 2014, 3:12am
UPDATED : Friday, 16 May, 2014, 7:07pm

China and Russia hope to sign a massive deal for natural gas supply when their leaders meet in a regional summit in Shanghai next week, a senior diplomat has said.

Under the deal, Russia will supply 38 billion cubic metres of natural gas annually to China for 30 years.

Deputy Foreign Minister Cheng Guoping told reporters yesterday that President Xi Jinping would discuss the deal and other points of co-operation with his Russian counterpart, Vladimir Putin, who will visit Shanghai on Tuesday.

The two companies are exchanging views on the pricing issue
Cheng Guoping, senior diplomat

The deal is between Russia's Gazprom and China National Petroleum Corporation (CNPC), but the two sides have yet to agree on pricing despite more than a decade of negotiations.

Xi will meet Putin on the sidelines of the Conference on Interaction and Confidence Building Measures in Asia, to be attended by 46 nations and agencies.

"The companies of the two nations are exchanging views on the pricing issue," Cheng said. "We will strive to get the companies to sign the natural gas co-operation deal and [have it] witnessed by both state leaders while Putin is in China."

Cheng said Xi and Putin reached a consensus over natural gas co-operation when Xi attended the Sochi Winter Olympics in February. Companies of both nations have reached agreement on many aspects of the deal.

Russian Deputy Energy Minister Anatoly Yanovsky said on Monday that the deal was "98 per cent ready".

Supply would begin no later than the end of 2018.

Russian business daily Vedomosti reported last month that the companies were negotiating a price in the range of US$360 to US$400 per 1,000 cubic metres.

Gazprom chief executive officer Alexey Miller said last year that the supply could be boosted to 60 billion cubic metres a year over the period of the contract. The gas would be supplied via two pipelines entering northeast and northwest China.

Russia has been trying to diversify its energy export base beyond the European market, where Gazprom generates about 80 per cent of its revenue.

China relied on imports for nearly a third of its natural gas needs, Xinhua said.

It imported 53 billion cubic metres of natural gas last year, according to the China National Petroleum Corporation.

Putin's visit will be his first to China since Xi was named president in March last year.

Observers expect both leaders to take a united stand on major international issues, and Putin may seek China's support on Russia's dealings with Ukraine.

Cheng said the two nations would issue a joint declaration on strategic co-operation after the talks, but added that China respected the integrity of Ukraine.

"The problems that are facing Ukraine should be resolved by the people of Ukraine," Cheng said.

"The problems should be resolved under the framework of respecting different groups of Ukrainians and their legitimate interests."