Economy

China gas deal with Russia 'in pipeline'

By Wu Jiao (China Daily)
Updated: 2011-06-08 08:18

BEIJING - China and Russia may achieve a major breakthrough in their stalled natural gas talks even before President Hu Jintao's state visit to Russia next week, Assistant Foreign Minister Cheng Guoping said on Tuesday.

Addressing a news conference in Beijing, Cheng said related departments and companies from both countries are engaged in active negotiations, which have seen great progress.

"If negotiations go smoothly, then I can say that in the near future, even before President Hu visits Russia, it's quite possible there could be a major breakthrough in natural gas cooperation," said Cheng, adding that Hu will visit Russia from June 15 to 18.

"We believe that companies from both countries will reach agreements based on the principles of friendly consultation and mutual benefit," Cheng said.

Last week, Vice-Premier Wang Qishan and Russian Deputy Prime Minister Igor Sechin signed a protocol for a Sino-Russian gas cooperation memorandum of understanding.

Russian gas giant Gazprom and China National Petroleum Corporation (CNPC) "were given until 10 June to finish talks and prepare a range of commercial contracts for signing", Interfax news agency quoted Sechin as saying after his talks with Wang.

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Under the deal, Gazprom will supply China with 68 billion cubic meters of gas annually over the next 30 years, said RIA Novosti. That's more than 75 percent of the 88.7 billion cubic meters of gas that China consumed in 2009, according to BP's Statistical Review of World Energy.

Gazprom and CNPC signed a framework agreement in 2009 on gas exports to China, but the negotiations became mired in differences over pricing.

According to Xing Guangcheng, an expert on Russian studies at the Chinese Academy of Social Sciences, the optimism now shown by both sides may signal that they have bridged their differences over pricing, which will help finalize the major gas deal.

"The deal is not an ordinary project between just two companies. It is a project of bilateral strategic importance, and it needs the determination of the leadership from both sides," said Xing.

The launch of gas exports to China would break Russia's dependency on exports to the European market, according to Xing.

On the other hand, importing natural gas from Russia will help China change its energy structure as the nation seeks to boost consumption of gas to cut carbon emissions and rely less on coal, said Xing.

The Chinese Foreign Ministry announced earlier that Hu would pay state visits to Kazakhstan, Russia and Ukraine from June 12 to 20. President Hu will also attend the annual summit of the Shanghai Cooperation Organization (SCO) in the Kazakh capital of Astana and the 15th International Economic Forum in Saint Petersburg.

According to Cheng, during Hu's stay in Russia, he will meet Russian President Dmitry Medvedev and Prime Minister Vladimir Putin.

Hu will attend a concert commemorating the 10th anniversary of the signing of the China-Russia Treaty of Good-neighborliness, Friendship and Cooperation.

The leaders will sign a joint statement on the 10th anniversary of the signing of the treaty, and China hopes that the leaders of both countries will jointly plan the direction for the development of bilateral relations over the next decade, Cheng said.

The June 15 Astana SCO summit will mark the 10th anniversary of the organization, founded in Shanghai, which brings together China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan.

Reuters and Xinhua contributed to this story.