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16:05 GMT +3 hours26 December 2014
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Russia, China Ink Historic Gas Supply Deal

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Russia and China agreed on a long-term gas supply contract in Shanghai on Wednesday, after years of talks on the deal, worth billions of dollars.

SHANGHAI, May 21 (RIA Novosti) – Russia and China agreed on a long-term gas supply contract in Shanghai on Wednesday, after years of talks on the deal, worth billions of dollars.

Russian Energy Minister Alexander Novak and Director of the Chinese National Energy Administration Wu Xinxiong signed an intergovernmental memorandum on the mutual understanding in gas deliveries field through the eastern route.

Earlier today, Russia’s gas major Gazprom and the China National Petroleum Corporation (CNPC) signed a contract of purchase and sale of natural gas deliveries through eastern route, a RIA Novosti correspondent said.

Gazprom CEO Alexei Miller has refused to name the gas price for China, citing a “corporate secret.” The price could be estimated at around $350 per 1,000 cubic meters.

Miller said the overall cost of the 30-year contract for Russian gas deliveries to China is $400 billion.

According to Miller, only at 4 am local time it became clear “that all the principal issues have been solved.”

Russia and China have foreseen providing “preferential tax regimes,” Miller told journalists, without giving details.

Russia earlier suggested nullifying the extraction tax for gas fields delivering fuel to China, while Chinese officials expressed their readiness to cancel import taxes on gas from Russia, Rosneft CEO Igor Sechin said Tuesday.

Gazprom’s stocks rose 0.9 percent following reports that the long-awaited gas supply contract was signed. Russian stocks increased Tuesday amid positive aftermath of the first day of President Vladimir Putin’s visit to Shanghai.

In March 2013, Gazprom and CNPC signed a memorandum of understanding on the planned gas supplies to China along the eastern route via the Power of Siberia pipeline. The signing of the contract has been delayed several times as the two sides failed to reach an agreement citing a pricing issue as the main stumbling block. President Putin’s current visit to China became the final stage of the negotiating process.

The Gazprom CEO said earlier the company could receive advance payment from China for the gas, which could start flowing as early as 2018. The planned project has an estimated capacity to pump up to 38 billion cubic meters annually, which could later increase to 60 billion cubic meters.

Tags:
gas supplies, CNPC, Gazprom