* China looks to settle price issue before Hu's visit
* Hu has made expanding energy supplies a priority
* Gazprom says profits from China deal must match Europe
(Adds details throughout)
By Chris Buckley
BEIJING, June 7 China said on Tuesday it hopes
for a "major breakthrough" in gas talks with Russia ahead of a
visit there next week by President Hu Jintao, who has made
securing energy for the world's second biggest economy a
At a briefing in Beijing, Chinese Assistant Foreign Minister
Cheng Guoping did not go so far as saying agreement was assured
on pricing and other prickly issues holding up a final deal for
Russian natural gas supplies.
But Cheng said he was confident, and noted that "the
governments and companies of both sides have been actively
engaged in work and negotiations".
"Personally, I'm confident that if progress is smooth, then
it's quite likely that in the near future, and even before
President Hu visits, both sides will achieve a major
breakthrough in cooperating over natural gas," he told a news
conference about Hu's visit.
An agreement on the gas project would be a big trophy for
Hu, who has courted Russia as one of the keys to greater energy
security as heady economic growth increasingly forces China to
look abroad for oil and gas.
Russia has been more coy about energy cooperation, despite
Moscow and Beijing both proclaiming themselves to be steadfast
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 also said it wants to settle the long-discussed
gas supply deal with China in time for the visit 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.
Hu will visit Russia later next week after visiting
Kazakhstan for a summit of the Shanghai Cooperation
Organisation, which brings together Beijing, Moscow and central
Asian governments to help coordinate security and economic
policy in that region. After visiting Moscow and St. Petersburg,
Hu will visit Ukraine.
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
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.
(Reporting by Sui-Lee Wee; Writing by Tom Miles; Editing by Ken
Wills and Alex Richardson)