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Gazprom cements China trade agreements amid fears of gas export competition from compatriots

20th August 2014

Gazprom has lauded its position as Russia’s chief natural gas exporter during cooperation talks with China’s ambassador to Russia; this comes as rivals, most notably Rosneft, are disputing the state-owned company’s monopoly on foreign trade

Gazprom cements China trade agreements amid fears of gas export competition from compatriots
Rosneft has called for greater access to foreign export markets through existing pipeline systems and through more competitive export agreements

The meeting held today between Gazprom head, Alexey Miller, and China’s chief ambassador to Russia, Li Hui, discussed issues relating to strategic cooperation in the gas sector as well as arranging the Russian natural gas supply to China via the eastern route.

This comes amid recent reports in the Russian press that Russia’s largest private oil and gas company, Rosneft, has called for greater access to foreign export markets through existing pipeline systems and through more competitive export agreements.

“It was pointed out that Gazprom made energetic efforts to build the required gas production, transmission and processing capacities in Eastern Russia,” Gazprom said in a statement today concerning the meetings. “Particularly, the preparations for the construction of the Power of Siberia gas pipeline were highlighted.”

Gazprom signed a USD 400bn natural gas supply deal with China’s state-owned oil and gas firm, CNPC, in May this year. It plans to use existing infrastructure to supply the gas, as well as building a whole new system of pipelines that it has called the Power of Siberia.

Other oil and gas operators want access to these networks so they can access lucrative export markets such as China.

It was reported early this week that Gazprom had petitioned the Russian government to block an attempt by Rosneft to export liquefied natural gas (LNG) from its Pechora fields in northern Russia.

Gazprom believes that increased competition would give foreign buyers of Russian natural gas an advantage in price negotiations – claiming this was the case in its CNPC negotiations earlier this year when a lower than expected strike-price was agreed.

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