ST. PETERSBURG, May 22 (RIA Novosti) – Gas deliveries to China under a 30-year contract signed Wednesday will be profitable for Russia, but the issue of nullifying extraction taxes still needs to be discussed, Russian Minister for Economic Development Alexei Ulyukayev said Thursday.
“The price [of gas deliveries to China] is without comment, but the profitability is, of course, 100 percent,” Ulyukayev said.
In response to a question on whether deliveries would be calculated with zero extraction taxes, the minister said that “this issue needs to be worked out, I believe the Finance Ministry has a bit of a different opinion.”
On Wednesday, Russian gas giant Gazprom and China’s CNPC struck a long-negotiated contract for the sale of Russian gas to China at a volume of 38 billion cubic meters per year with delivery via an eastern pipeline.
The price of the Russian gas under the contract, however, remains a trade secret. A source familiar with the terms of the deal told RIA Novosti Wednesday that the price exceeds analysts’ estimates of $350 per thousand cubic meters, though he refused to name the exact figure citing commercial confidentiality.
Gazprom CEO Alexei Miller also declined to reveal the contract price for gas for the same reason. He did, however, say that the value of the entire contract was $400 billion, which if calculated against the expected flow amounts, comes to around $350 per thousand cubic meters.
According to Russian President Vladimir Putin, the price was pegged to the market price of oil and oil products and satisfied both parties.
The two sides were in talks on the contract for several years but had failed to earlier reach an agreement on the gas price.
