Zubkov says Gazprom gas price talks with China difficult
Despite difficulties at price talks, Gazprom will reach an agreement on gas supplies to China, the company's chairman of the board Viktor Zubkov is convinced. According to him, Beijing has already agreed to the proposed amounts of gas. Asked what parameters China would like to link the price to, Zubkov replied that "the Chinese side probably believed there were other parameters that prices could be pegged to" but Gazprom was concentrating on the link to oil. He also confirmed that the possibility of China building a gas pipeline was on the agenda and spoke against liberalizing LNG exports. "As an interested party, I am of course in favour of preserving the current situation," Zubkov said.
In late February it was reported that Gazprom had agreed with China's CNPC to step up talks on Russian gas supplies "with a view to signing a sale and purchase contract on Russian gas by the end of 2013". The deadline for the companies was set by the Russian-Chinese intergovernmental commission on energy cooperation headed by Deputy Prime Minister Arkady Dvorkovich and Vice-Premier Wang Qishan, a statement issued by Gazprom said.
Russia and China have been in talks on gas supplies for nearly 10 years. Now the parties have confirmed previously agreed basic parameters, including amount of supplies, start date, duration of supplies, delivery point at the border as well as other terms. In addition, an underground storage facility in China, its marketing as well as joint production of shale gas are being considered as possible further areas for cooperation.
Earlier, Gazprom deputy head Aleksandr Medvedev said that Russia and China continued to discuss supplies of Russian gas along two corridors, to a total amount of up to 68 billion cubic metres a year. In late 2012 Gazprom announced its decision to invest in the development of the Chayandinskoye oil and gas condensate field in Yakutia, from where supplies to China could begin.
However, the main issue – that of the price of gas – has still not been resolved, a Vedomosti source at Gazprom said. The price formula has been set but the sides can still not agree on some coefficients. The prices being proposed by China cannot cover Gazprom's costs of developing the field, the source said, without however specifying any numbers.