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Russia and China plan Western Route pipeline and bolster existing energy partnership

13th October 2014

China and Russia have strengthened their energy ties by reaffirming their plans for delivering natural gas via Russia’s Far East and by setting up a new contract to transmit gas from the more westerly Altai region

Russia and China plan Western Route pipeline and bolster existing energy partnership with new agreements
'The supply contract [Western Route] for 30 billion cubic metres of gas a year is being prepared' - Gazprom head

The Chinese and Russian governments have signed an intergovernmental agreement at a Beijing conference to further develop the existing arrangement to supply natural gas to China via the Eastern Route transmission network.

The two nations have also furthered negations and timetabled a firm schedule for inking a trade agreements that will see another mega gas transportation system deliver energy to the world’s largest consumer. Over the past six years, bilateral trade has more than doubled from USD 40bn to USD 90bn.

Talks also took place between the heads of the countries’ state oil and gas enterprises Gazprom and CNPC.

“The top priority of the current talks is the western route,” said Alexei Miller, Gazprom chairman of the management committee. “The supply contract for 30 billion cubic metres of gas a year is being prepared. The Altai project is fully ready to initiate the construction. Later on, the second and third gas pipeline strings might be constructed to reach the potential output of up to 100 billion cubic metres a year.”

The discussions took place as part of the 19th Regular Meeting of the Heads of Government of Russia and China in Beijing.

Three main documents are due to be inked; an intergovernmental agreement, a commercial contract and a technical agreement

“The talks in China were held in the atmosphere of warmth, friendliness and confidence. Their results are highly important. At the meetings we outlined the new levels for interaction in the gas sector, with regard to supply volumes, long-term cooperation and new business segments.”

Gazprom also held talk with CNOOC.

“The new areas of cooperation include joint projects in Russian and Chinese offshore oil fields, power generation projects in China as well as joint activities in third countries. Gazprom is ready to consider the possibility of pipeline gas export to China as an alternative to the Vladivostok LNG project.”

CNPC is China's largest petroleum company wholly-owned by the state and is one of the world's leading integrated oil and gas production companies, focused on hydrocarbon production and transmission as well as providing engineering and petroleum services.

On May 21, 2014 Gazprom and CNPC signed the Purchase and Sale Agreement for the Russian gas supply via the Eastern Route. The 30-year contract provides for gas supplies in the amount of 38 billion cubic metres of gas per year.

The Eastern Route stipulates the delivery of Russian natural gas from the Irkutsk and Yakutia gas production centres to China via the Power of Siberia gas trunkline.

The western route stipulates gas supplies from West Siberian fields to China.

CNOOC is the oldest out of the three major petroleum companies in China, holding an exclusive right for prospecting and exploration as well as for oil and gas production offshore China. CNOOC is the biggest oil and gas producer on China's offshore shelf. The company is focused on field exploration and development as well as oil and gas production and sales in China.

 

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