Russia-China gas deal preparations in 'final phase' says Putin: Xinhua

SHANGHAI Sun May 18, 2014 8:27pm EDT

The company logo of Russian natural gas producer Gazprom is seen on an advertisement installed on the roof of a building in St. Petersburg, November 14, 2013. REUTERS/Alexander Demianchuk

The company logo of Russian natural gas producer Gazprom is seen on an advertisement installed on the roof of a building in St. Petersburg, November 14, 2013.

Credit: Reuters/Alexander Demianchuk

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SHANGHAI (Reuters) - Preparations for an agreement on long-awaited Russian natural gas exports to China have entered "the final phase", China's state-run Xinhua news agency on Monday quoted Russian President Vladimir Putin as saying ahead of a two-day visit to Shanghai.

"For Russia, implementing these agreements means diversifying gas supply destinations, while for our Chinese partners ... it could be a remedy for energy shortages and helps ecological security," Xinhua quoted Putin as saying in an interview with Chinese media ahead of the May 20-21 visit.

A deal after nearly two decades of talks would secure the world's top energy user a key chunk of supply as demand for the cleaner burning fuel is set to surge.

For Russia, the deal to supply China with 38 billion cubic meters (bcm) of gas a year would help cut its dependence on Europe as the major market for its gas and create a strategic shift to Asia, as political pressure piles up over Ukraine.

Russian state-run Gazprom (GAZP.MM) said at the weekend it was still "one digit" away from finalizing a 30-year gas supply deal with Beijing which is expected to crown Putin's visit to China next week.

Earlier this month, state China National Petroleum Corp (CNPC) CNPET.UL said that it and Gazprom had reached an agreement to sign a contract during Putin's visit but that the two sides had yet to iron out price differences.

At 38 bcm per year, Russian supplies would be equal to nearly a quarter of current consumption and make up nearly a tenth of China's estimated total gas demand by 2020.

China is fast-tracking gas use, which is set to grow about 2.5 fold between 2014 and 2020, to curb use of the dominant but dirtier coal.

The country's state planning agency forecast last month that China would raise its total natural gas supply capacity to 400 billion cubic meters (bcm) per year by 2020.

(Reporting by John Ruwitch; Editing by Richard Pullin)

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Comments (6)
TruWorldPeace wrote:
I hope the EU will now be even more highly motivated to sanction Russia. The new world economic order is taking shape very fast. Lets hope for the best.

May 19, 2014 9:15am EDT  --  Report as abuse
TruWorldPeace wrote:
I hope the EU will now be even more highly motivated to sanction Russia. The new world economic order is taking shape very fast. Lets hope for the best.

May 19, 2014 9:19am EDT  --  Report as abuse
JackHerer wrote:
TruWorldPeace – you are clearly neck deep in Kremlin propaganda, with the coastline of the truth only a distant dot on the horizon.

Even if this gas deal comes to fruition, it would only be a fraction of the gas which Russia currently supplies to Europe.

If Putin is making such a big thing of this deal therefore, then how important does that make the EU as a customer to Russia?

Very is the clear answer.

Russia needs the West far more than we need them.

Last point – why do Gazprom need $25 billion up front on this latest deal? I thought Russia was awash with cash reserves.

Not so hey.

One things for sure. Any paid online Kremlin goons need to make sure they are paid in Western currency if they are smart.

May 19, 2014 10:42am EDT  --  Report as abuse
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