(Adds gas industry comment)
By Denis Pinchuk and Alexei Anishchuk
MOSCOW/ST PETERSBURG, Russia, March 15 Prospects
are dim for a Russia-China pipeline gas deal next week during a
visit to Moscow by China's new president, Xi Jinping, as each
side remains unmoved by the other's demand for price
concessions, gas industry sources said.
"We expect that our positions will converge on the contract
terms," Gazprom spokesman Sergei Kupriyanov told Reuters. "We
are not preparing to sign anything."
Russia and China appear to be natural partners when it comes
to trade in raw materials, but they have failed so far to seal a
gas supply deal over nearly two decades, largely because Russia
won't cut its price to levels within reach of Chinese end-users,
who are highly sensitive to input cost inflation.
A Russian gas industry source said the Chinese price
position remained fixed at $250 per thousand cubic metres, while
Gazprom's price demand hovered around $300, although its hand
has been weakened by falling prices around the world in the wake
of the U.S. shale revolution.
The new Xi presidency is seen as a chance for a fresh start
in the talks, but there is no sign the two sides have overcome
the domestic and diplomatic obstacles that stand in the way of a
In the meantime, rivals to Gazprom, including state oil
giant Rosneft, which has substantial gas reserves of
its own, have seized the initiative and are making a play for
Asian customers with plans to export liquefied natural gas.
LOANS FOR GAS?
Rosneft has been more successful than Gazprom in negotiating
with Chinese buyers. In 2008 it secured a $25 billion
loans-for-oil deal to finance construction of the East
Siberia-Pacific Ocean pipeline (ESPO), which now supplies China
and other Asian customers with crude.
That deal was bolstered by an earlier agreement to give
China's Sinopec access to Russia's onshore oil
reserves through a partnership with Rosneft at a regional
Russian Energy Minister Alexander Novak has expressed
support for a loans-for-gas deal to help finance of fields and
pipeline construction closer to the Chinese border, along the
lines of the loan won by Rosneft.
On Friday Novak told reporters Russia was working on plans
to increase oil and gas supplies to China ahead of Xi's visit
but declined to comment on prospects for deals.
"This issue is still in the development phase," he said, and
declined to comment on prospects for deals. "We'll tell you in a
Rosneft appears keen to boost supplies as soon as possible
by using a pipeline that crosses Kazakhstan to deliver crude
oil, possibly by swapping Kazakh crude oil delivered at the
border for equal volumes of Russian crude.
Novak said the government was considering an increase in
crude oil supplies to China through the branch of ESPO that
carries oil to the Chinese border but was not looking at
increased supplies via Kazakhstan.
(Additional reporting by Olesya Astakhova; Writing by Melissa
Akin; editing by Jane Baird)