Russia, China agree 30-year gas deal via new pipeline, to settle in euros (updated)
04/02/2022 11:11
* Russia already sells pipeline gas, LNG to China
* Gazprom to sell additional 10 bcm of gas to China
* Flows in new pipeline within three years, says source
* Russia at loggerheads with Europe over Ukraine
(Adds comment, details)
By Chen Aizhu
SINGAPORE, Feb 4 (Reuters) - Russia has agreed a 30-year
contract to supply gas to China via a new pipeline and will
settle the new gas sales in euros, bolstering an energy alliance
with Beijing amid Moscow's strained ties with the West over
Ukraine and other issues.
Gazprom GZAVI.MM , which has a monopoly on Russian gas
exports by pipeline, agreed to supply Chinese state energy major
CNPC with 10 billion cubic metres of gas a year, the Russian
firm and a Beijing-based industry official said.
First flows through the pipeline, which will connect
Russia's Far East region with northeast China, were due to start
in two to three years, the source said in comments that were
later followed by an announcement of the deal by Gazprom.
Russia already sends gas to China via its Power of Siberia
pipeline, which began pumping supplies in 2019, and by shipping
liquefied natural gas (LNG). It exported 16.5 billion cubic
metres (bcm) of gas to China in 2021.
The Power of Siberia network is not connected to pipelines
that send gas to Europe, which has faced surging gas prices due
to tight supplies, one of several points of tension with Moscow.
Under plans previously drawn up, Russia aimed to supply
China with 38 bcm of gas by pipeline by 2025.
The new deal, which coincided with a visit by Russian
President Vladimir Putin to the Beijing Winter Olympics, would
add a further 10 bcm, increasing Russian pipeline sales under
long-term contracts to China. urn:newsml:reuters.com:*:nL1N2UF0G2
Gazprom gave few details about the deal in its announcement.
Russian gas from its Far East island of Sakhalin will be
transported via pipeline across the Japan Sea to northeast
China's Heilongjiang province, reaching up to 10 bcm a year
around 2026, said the Beijing source, who asked not to be
identified.
The deal would be settled in euros, the source added, in
line with efforts by the two states to diversify away from U.S.
dollars.
A CNPC representative did not immediately comment.
Discussions between the two firms began several years ago
after the start-up of Power of Siberia, a 4,000-km
(2,500-mile)pipeline sending gas to China. Talks accelerated
more recently after Beijing set its 2060 carbon neutral goal,
the source said.
"China's coal shortage last year served as another wake-up
call that natural gas has its special value, that's why CNPC
decided to top up with the new pipeline deal," the source said.
A CNPC representative did not immediately respond to a
request for comment.
The pricing of the new gas deal will be similar to that of
Power of Siberia, the source said, adding that both were "fairly
satisfied" with that arrangement.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Russia-China plan new gas pipeline https://tmsnrt.rs/3GsIGvV
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Reporting by Chen Aizhu in Singapore and Vladimir Soldatkin in
Moscow and Marwa Rashad in London, Editing by Timothy Heritage
and Edmund Blair)
((aizhu.chen@thomsonreuters.com; Reuters Messaging:
aizhu.chen.reuters.com@reuters.net))