(EnergyAsia, October 15 2014, Wednesday) — Nearly five months after signing a world-record US$400 billion agreement to sell natural gas to China National Petroleum Corp (CNPC), Russia’s Gazprom said it is advancing on technical and banking arrangements towards implementing the deal from 2019.
On Monday, the two state-owned companies announced they had signed a technical agreement spelling out the basic parameters of design, construction and operation of the proposed cross-border ‘Power of Siberia’ gas pipeline along with its technical and technological features.
The agreement was signed in Moscow by Gazprom chairman Alexey Miller and CNPC vice president Wang Dongjin in the presence of Russian Prime Minister Dmitry Medvedev and his visiting Chinese counterpart Li Keqiang. Gazprom described the document as a supplement to the sales and purchase agreement on natural gas supplies signed on May 21.
“As of today, all the necessary documents on gas supplies to China have been signed,” declared Mr Miller.
“The construction of Power of Siberia is in full swing. We have a particular plan and specific deadlines to be met without fail.”
The agreement calls for Russia to supply 38 billion cubic metres per year to China over a 30-year period through an eastern route with Gazprom initially tapping the 1.2-trillion-cubic metre (tcm) Chayandinskoye field in Yakutia, and later the 1.5-tcm Kovyktinskoye field in Irkutsk. A separate western route to be built later will deliver gas from West Siberian fields to China.
As a unified gas transmission system (GTS), the Power of Siberia line will link the Irkutsk and Yakutia fields to the Russian Pacifric port of Vladivostok via Khabarovsk. The Yakutia–Khabarovsk–Vladivostok trunkline will be constructed first, and will be followed later by another line linking it to Irkutsk.
The GTS route will run alongside the Eastern Siberia Pacific Ocean (ESPO) crude oil pipeline to maximise cost savings on infrastructure construction and power supply.
Talks progressing on pipeline routes and LNG supply
Separately, Mr Miller hosted China’s First Vice Premier Zhang Gaoli and CNPC chairman Zhou Jiping for an update on the ‘Intergovernmental Agreement’ pertaining to the two proposed gas pipeline routes.
Gazprom said an agreement on the eastern route “could be signed in the near future” as talks continued on plans to open up the western route.
The Russian firm has also started discussions with another Chinese state-owned company for the supply of liquefied natural gas (LNG) during a meeting between Mr Miller and CNOOC chairman Wang Yilin.
Describing the various discussions as being held in an “atmosphere of warmth, friendliness and confidence”, Mr Miller said the two sides achieved “new levels for interaction in the gas sector, with regard to supply volumes, long-term cooperation and new business segments.”
The new areas of cooperation include joint projects in Russian and Chinese offshore oil fields, power generation projects in China as well as joint activities in third countries.
Gazprom said it is ready to consider the possibility of pipeline gas export to China as an alternative to the Vladivostok LNG project.
Gazprom meets Chinese bank ICBC
On Tuesday, Mr Miller hosted Jiang Jianqing, chairman of China’s ICBC bank at Gazprom’s Moscow headquarters.
To reduce the debilitating impact of Western trade sanctions on Russia, Gazprom is looking to tap one of China’s largest financial institutions for trade and corporate financing, support in issuing bonds in offshore renminbi and launch of a payment system using the two countries’ currencies to bypass the US dollar.