BEIJING, June 7 (Reuters) - China hopes for a "major breakthrough" in gas talks with Russia, a senior foreign ministry official said on Tuesday, adding that both sides were engaged in active negotiations ahead of a visit to Russia by President Hu Jintao this month.
"If progress proceeds 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," Chinese Assistant Foreign Minister Cheng Guoping told a news conference in Beijing.
Last week Russian Deputy Prime Minister Igor Sechin said Gazprom and CNPC , which control the two countries’ gas pipelines, had been tasked to prepare a package of contracts for signing before June 10.
Moscow has said it wants to settle the long-discussed gas supply deal with China in time for a visit in mid-June by President Hu, which fits in nicely with repeated promises to strike a deal around the middle of 2011.
The confident anticipation of a deal from both sides suggests they have bridged the divide over prices, which officials had long said was the main obstacle to a final deal.
Prime Minister Vladimir Putin, who was then Russia’s president, launched the ambitious plan for an eastern gas pipeline network during a visit to Beijing in 2006.
The prospect of an eastern gas pipeline route, following a deal on an oil pipeline that is now up and running, offered Gazprom a big second market to counterbalance its supplies to Europe, which Putin worried had too much of a hold on Russian gas exports.
For China, imports of Russian gas will provide a further pillar to prop up its rapidly growing gas market, which is already attracting growing volumes of liquefied natural gas by ship and receiving Turkmen gas via a pipeline.
To keep supply ahead of demand, China is also investing heavily in developing its own gas deposits, including alternative sources such as shale gas and coal bed methane.
According to a joint document signed in October 2009, China should start getting gas through the Russian pipeline in 2014-2015. Sechin said last week that Russia would deliver 68 billion cubic metres a year for 30 years via two routes, one to the west of Mongolia and one down Russia’s eastern seaboard.
By comparison, Gazprom’s European exports are expected to be over 150 bcm this year and China’s pipeline from Turkmenistan, which began operating in late 2009, should be running at full throttle, 30 bcm, next year.
Gazprom said on Monday it would not accept lower profits on deliveries to China than those on sales to Europe. Gazprom CEO Alexei Miller said European customers would pay $500 per 1,000 cubic metres in the fourth quarter of this year, 42 percent more than it forecast in February.
