When Belarus reluctantly agreed to pay a much higher price for Russian gas in the dying minutes of 2006, China began preparing for a similar rise.

China PetroChemical Corporation (Sinopec Corp) experts said on Friday that the country's increasing dependence on natural gas imported from Russia meant prices would rise in the domestic market.

A Shanghai Securities News report said China National Petroleum Corporation (CNPC) and Russia had failed to agree on the price for natural gas to be imported from Sakhalin.

China's top oil producer signed a gas import framework agreement in 2006 with Sakhalin Energy Investment (SEI), the company that operates the Sakhalin projects and is a major liquefied natural gas (LNG) exporter.

SEI Vice-President, Marketing, Koert Vonkeman, said at an industrial forum last November that China would have to pay international market prices for LNG imports sooner or later.

Gas prices have risen to new levels in the global market because of an oil price hike. But natural gas price in China remains at a low level.

Jointly operated by China National Offshore Oil Corporation and BP, the country's first LNG project in Guangdong Province would need 3.7 million tons of LNG a year from the Northwest Shelf Australia LNG venture project under a 25-year contract.

Price has become a major obstacle in China's LNG plans. National Development and Reform Commission statistics show that the current ratio for domestic oil and natural gas prices is 1:0.24, when the global equivalent is 1:0.6.

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