Moscow - Consultations on the supply of Russian gas to China via the so-called western route have evoked new disagreements, and the agenda for the negotiations may grow to encompass shipment by the eastern route, a source close to the management at China National Petroleum Corporation (CNPC) told Interfax.
Representatives of China’s energy sector and CNPC were in Moscow from Wednesday to Saturday for discussions with their partners at Gazprom, the source said.
The idea of CNPC paying Gazprom an advance of $40 billion for gas was offered, the source said, relating that Gazprom was prepared to give a gas-price discount, but even that did not provide China with a project income level of at least 12%-15%, which is the main demand among Chinese companies as to investment projects.
Russian authorities have said a western-route gas contract would not be signed before year-end, which the Interfax source confirmed.
On the other hand, Gazprom had signaled that it might start discussing the eastern route, the source said. The Russian negotiators asked their Chinese partners how they viewed the delivery price and in what form were they prepared to talk part in the project.
The eastern route is more viable for China, as China already gets supplied with gas from Central Asia in the west, and the country also does its own production there. But in the northeast, where the provinces of Heilongjiang, Jilin, and Liaoning are located, heavy industry is experiencing an insufficiency of gas, and 80% of the energy balance there is coal.
China is interested in taking part in a project for the building of a gas pipeline from Russia to South Korea, and the province of Liaoning might play a role in the project as a transit territory.
The source said that CNPC and ExxonMobil have already struck agreement and the price of gas from Sakhalin-1. He estimated that after needs in Russia’s Far East are met gas exports to China could amount to 5 billion cubic meters per year. He also said CNPC is interested in taking part in the opening of the Kovykta and Chayanda deposits in Eastern Siberia.
