* Long-delayed Russia-China gas deal seen in May
* Gazprom has agreed to lower gas price - sources
* Rosneft competition spurs Gazprom to speed up deal
* Russia looks East as relations with West sour over Ukraine
By Vladimir Soldatkin and Chen Aizhu
MOSCOW/BEIJING, April 23 Europe's plans to
reduce its dependence on Russian energy as the Ukraine crisis
threatens supplies are spurring efforts by Russia's top
producer, Gazprom, to sign a deal next month to pump
gas to China, industry sources say.
The elusive deal, slated to be signed next month when
Russian President Vladimir Putin is expected to visit China and
seen as vital if Russia is to be a big player in Asian gas
markets, would wrap up a decade of talks in which price has been
the main obstacle.
"Judging by the speed of work which is under way in Gazprom,
I would say that the possibility that the deal would be signed
is 98 percent," a Gazprom source said, adding agreement on what
China would pay for the gas was close.
A Beijing-based oil executive also spoke of progress.
"The pace of negotiations was quickening up ... That means
more remaining issues were being sorted out more quickly than
before," the executive said.
Gazprom's partner in the deal is China National Petroleum
Corp, the country's top oil and gas producer. Both
firms declined comment on the talks.
Putin, who oversees all Russia's major energy deals, is
expected to visit Shanghai on May 20-21, although the Kremlin
has not announced the trip.
The sources said the deal was being pushed ahead by the
Ukraine crisis, which has prompted Gazprom's European customers,
who currently provide 80 percent of the company's revenues, to
seek alternatives to Russian supplies.
Gazprom, the monopoly exporter of Russian gas by pipelines
and long seen as a tool of Kremlin foreign policy, supplies a
third of Europe's gas demand, half of it through Ukraine. It has
warned of supply cuts to Ukraine over an unpaid gas bill, which
Russia puts at $2.2 billion.
To make a deal more attractive for China, the sources said
Gazprom had made further price concessions, hoping China will
agree a price of $10-$11 per mmBtu (million British thermal
units). China is believed to pay $9 per mmBtu to Turkmenistan,
the Central Asian state that beat Gazprom to the Chinese market.
The source in China said that China would like more access
to Russia's upstream assets, something Moscow has so far been
reluctant to agree to.
Under the new deal with China, Gazprom would supply 38
billion cubic metres of gas a year, around a quarter of China's
current annual demand, from 2018 via a pipeline from Eastern
Siberia that has yet to be built.
The Gazprom source said the company was ready to allow China
to invest in the new pipeline and other infrastructure.
Fears of being pipped by rival Russian energy giant Rosneft
in the race to feed China's energy needs has also seen
the pace pick up in the talks, in which many deadlines have been
Rosneft, headed by powerful Putin ally Igor
Sechin, has secured rights to ship liquefied natural gas
(LNG)abroad. It also aims to triple oil supplies to China from
the 300,000 barrels a day it sent last year.
"Rosneft's push for gas exports will quicken Gazprom's
decision to sign the deal with China. It is certainly one of the
factors, which weaken Gazprom's negotiation position," a banking
source in Moscow said, requesting anonymity.
The Oxford Institute for Energy Studies, underscoring the
urgent need for Gazprom to sign the deal, said it is now or
never for the Russian company.
"If it is agreed, the impact on China's domestic gas market,
and on regional and global trading, will be substantial and well
beyond previous expectations," it said in its quarterly journal.
"If there is no deal, Russia will have a hard time carving
out a lucrative slice of the Asian gas market in coming years."
(Additional reporting by Olesya Astakhova, Alexei Anishchuk and
Katya Golubkova; editing by Henning Gloystein and Giles Elgood)