Moscow, Beijing prepare for 2nd major gas deal
June 5, 2014, 5:36 am

File photo of Russia’s President Vladimir Putin signing an autograph on a natural gas pipeline [Getty Images]

“Given the pace of Chinese economic growth … with an agreement upon the compromise (gas) price formulas having been achieved, it is very likely that a contract could also be signed in the very near future for the construction of a western route (gas pipeline) that will fully cross the Siberian Federal District, ” Russian presidential administration chief Sergei Ivanov told reporters in the Siberian city of Novosibirsk on Wednesday.

He said the contract on the western route, also called the Altai natural gas pipeline, might be “less capital-intensive” than that of the eastern one, but “it’s no doubt going to cost us tens of billions of US dollars,” Itar-Tass news agency reported.

The official said the project, like the eastern one, would create jobs and stimulate many economic industries, which will have “a cumulative effect.”

Russia is the world’s biggest energy exporter and China, the top importer.

The long-awaited gas deal in Shanghai ended a decade of natural gas supply talks between the two neighbors and according to Russian official estimates could add 0.3-0.4 percentage points to economic growth annually from 2015.

According to the $400 billion deal, Russia will deliver up to 38 billion cubic meters of natural gas annually to China from 2018 via the eastern route. The gas will come from Russia’s Kovyktin and Chayandin gas fields in eastern Siberia and will be piped to China’s northeast, the Beijing-Tianjin-Hebei metropolitan area in the north and the Yangtze river delta in the east.

Meanwhile, G7 leaders in Brussels held a meet for the first time in 17 years without Russia and have threatened stricter sanctions against Moscow over the Ukraine crisis.

Europe is Russia’s key gas export market and the continent gets a third of its gas needs from Moscow.

With Russia and Ukraine in the throes of a gas dispute with debt mounting on Kiev, supplies to Europe could be disrupted.

Moscow on Thursday ruled out a return to the Group of Eight (G8), made up of the seven most industrialized nations, known as G7, and Russia.

 TBP and Agencies