Date
19 November 2017
Russia will supply gas to China from its western Siberia projects under a deal expected to be signed this year. Photo Bloomberg
Russia will supply gas to China from its western Siberia projects under a deal expected to be signed this year. Photo Bloomberg

China, Russia set to sign gas deal

Russia is expected to sign a deal this year to supply gas to China from western Siberia.

The deal allows Russia to choose between exporting gas to China or to Europe, the Financial Times reported Monday.

Russia split with the West over its support of separatist rebels in Ukraine, pushing it closer to China which is eager to develop overland energy supply lines that reduce its dependence on vulnerable sea lanes.

Chinese Foreign Minister Wang Yi said China will begin building the eastern gas line and sign a co-operation agreement for the western line.

During a visit to Beijing in November, Russian President Vladimir Putin reached a preliminary agreement for Gazprom, the Kremlin-controlled energy group, to supply China’s state oil company CNPC with 30 billion cubic meters of gas per year from the Altai region of western Siberia.

However, most of the details, including the price of the gas, are still to be worked out.

Russia has also made a commitment to sell gas from its far east to China but gas from that area of Siberia can only be sold economically to Asia.

In a US$400  billion agreement signed during Putin’s visit to Shanghai in May, Russia agreed to sell up to 38 billion cubic meters a year to China, the report said.

Chinese and Russian leaders officially inaugurated construction of the Power of Siberia pipeline in September last year but little work can be done during the harsh Siberian winter.

The two sides have also disagreed over financing for the massive projects, with Russia strapped for cash amid sanctions imposed by the West. To sweeten the deal for China, Russia has offered Chinese oil firms the chance to invest directly in its upstream operations.

Russia’s deputy premier Arkardy Dvorkovich told an investment forum last month that there are no longer political barriers to China controlling strategic assets.

– Contact us at [email protected]

RA

EJI Weekly Newsletter

Please click here to unsubscribe