Russia, China Close In On Multi-Billion Dollar Gas Deal
Russian energy giant Gazprom and state-owned China National Petroleum Corporation (CNPC) have signed an agreement towards a potentially multi-billion dollar gas supply deal to China, reported Reuters, though both sides are yet to reach a final accord on price.
The terms were signed on Thursday by the heads of both companies in the presence of Presidents Vladimir Putin and Xi Jinping ahead of the G-20 meeting in St. Petersburg; defining “the volumes, start of deliveries, payments, ‘take-or-pay’ amendment” and other issues for the deal, but giving no further details on the actual price.
Gazprom had first signed a memorandum of understanding with China in 2006 to eventually ship up to 68 billion cubic meters of gas per year via two routes, but the two sides remained locked in negotiation with price the major stumbling block.
According to Reuters, Russia charges Europe around $370-380 per 1,000 cubic meters of natural gas, though China has demanded a steep discount – at approximately $250 to preserve a cost advantage that makes Chinese producers more competitive globally.
The squabble over prices had prompted China to sign massive gas deals with other exporting nations including Australia, Qatar, and Turkmenistan, reported Russia Today.
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