The deal between Russia’s Gazprom and China’s CNPC has been ten years in the making but the 30-year agreement on the delivery of Russian gas to China is “98 per cent ready” – Russia’s Deputy Energy Minister Anatoly Yanovsky has said.
Russia is to deliver 38 billion cubic meters of gas per annum for 30 years, starting in 2018, with the possibility of this amount rising to 60 billion cubic meters per year over the duration of the contract.
The price negotiated in the contract is expected to be lower than Russia’s initial expectations and to set at around $10 to $11 per 1,000 cubic feet of gas – an equivalent to current European prices.
Russia’s position in the negotiations has been weakened by Europe’s turn to shale gas and American LNG as a result of the ongoing crisis in Ukraine, as well as China’s own efforts at shale gas exploration and LNG imports from the U.S. due to commence in 2015.
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