Gazprom and CNPC sign deal on supply of Russian gas to China

Russian oil and gas behemoth Gazprom has signed an agreement with China National Petroleum Corporation (CNPC), the biggest state-owned oil and gas company of China, on the supplies of Russian natural gas to China.
"On December 22-27, Gazprom's delegation, led by deputy CEO Alexander Medvedev, held the final round of discussions with CNPC relevant to arranging Russia's gas supplies to China via the western and eastern routes," a Gazprom information department official was quoted as saying.

A memorandum on Russian-Chinese cooperation in the natural gas sphere was signed in June, during Chinese president Hu Jintao's official visit to Russia.
"Based on the results of the negotiations and in compliance with the previously reached agreements between Gazprom Export and a subsidiary of CNPC, PetroChina International, the sides signed the agreement on major terms and conditions for the supplies of natural gas from Russia to China," the official said.

Under the western option, gas will be supplied from West Siberia, while under the eastern route gas will be pumped from East Siberia, the Russian Far East, and offshore Sakhalin deposits. Earlier, a Gazprom spokesman said that Russia's future natural gas exports to China would be equivalent to around one-third of its Europe-bound gas supplies.
"I believe that the volume of gas supplies to China will be about a third of the volume of our European gas supplies," he said.

The parties also agreed to promote their intensive cooperation in January-March 2010 in order to reach an understanding on other terms and conditions, which would subsequently lay the foundation for entering into contracts on gas supplies from Russia to China.
Medvedev earlier said that the Russian energy giant planned to increase gas exports to countries outside the Commonwealth of Independent States by 13 % in 2010 from the current year to 160.8 bn cm and foreign currency proceeds by 18 % to $ 50.3 bn. On 29 November, Gazprom had agreed to supply French energy giant Electricite de France (EdF) up to 6 bn cm of natural gas.

In 2009, Gazprom expects to receive over $ 40 bn in foreign currency proceeds from its gas exports to non-CIS countries. Gas exports to non-CIS countries in 2009 are expected to reach 142.5 bn cm.
Gazprom and CNPC also consider possibilities for the implementation of joint projects in the gas refining and gas chemistry in Russia's east, as also projects in third countries.

In October 2008, Russia and China reached an agreement to build a Chinese leg of the East Siberia-Pacific Ocean (ESPO) oil pipeline, which is designed to pump up to 1.6 mm barrels of crude per day from Siberia to Russia's Far East and to energy-hungry China and the Asia-Pacific region. Russian Prime Minister Vladimir Putin officially launched the ESPO oil pipeline during his visit to the region.
The Russian premier also visited the specialised maritime oil-loading port of Kozmino, the final point of the ESPO project, where he gave the start to pumping the first batch ofSiberian oil into an oil tanker.

The project's first leg envisages the construction of a 2,757-km section with a capacity of 220.5 mm barrels of oil per year. It will link Taishet, in East Siberia's Irkutsk region, to Skovorodino, in the Amur region, in Russia's Far East. The second stretch will run 2,100 km from Skovorodino to the Pacific Ocean. It will pump 367.5 mm barrels of oil annually.
The construction is expected to be completed by late 2010.