Russia signs massive gas contract with China for 30 years, worth $400bn

Photo: AP photo

Russia signs massive gas contract with China for 30 years, worth 0bn. 52810.jpeg

Gazprom and Chinese company CNPC signed a contract on May 21st about gas supplies to China. The document was signed within the scope of the official visit of Russian President Vladimir Putin to China. The agreement between the two companies was signed for 30 years and provides for the delivery of up to 30 billion cubic meters of gas per year. The total cost of deliveries will reach 400 billion U.S. dollars.

The signed contract for the supply of Russian gas to China will allow Russia to redistribute pipeline routes. For Beijing, it will allow to reduce energy deficit, Putin said.

It took the parties several years to sign the contract. Back in October 2009, Gazprom and CNPC signed a framework agreement on basic conditions of supply of natural gas from Russia to China, suggesting exports of 68 billion cubic meters of gas to the Chinese market every year.

The head of Rosneft, Igor Sechin, said that Russian President Vladimir Putin offered to zero the tax for the extraction of raw materials for the gas fields that will supply gas to China under the new contract. The Chinese side, in turn, has declared its readiness to cancel import duties on gas from Russia.

At the same time, nothing specific has been reported about the price that China will pay. Gazprom was expecting to receive $400 per 1000 cubic meters. The Chinese side would like to pay 350-360 dollars per 1,000 cubic meters.