Moscow (Platts)--11Dec2012/506 am EST/1006 GMT

The recent final investment decision taken by Gazprom on the development of the giant Chayanda gas field in East Siberia paves the way to move negotiations forward on gas supplies to China via the so-called eastern route, Gazprom CEO Alexei Miller was quoted as saying in a company statement Tuesday.

"The final investment decision on...Chayanda and the construction of the Yakutia-Khabarovsk-Vladivostok trunk pipeline has moved talks on gas supplies to China via the eastern route to a practical level," Miller said.

Last Friday, Miller said that Gazprom and its Chinese partners had re-started their negotiations on supplies via the eastern route.

The capacity of the route may be increased from the previously planned 38 billion cubic meters/year, Miller said at the time.

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Gazprom had also revised its price proposal for gas supplies to China via the western, or Altai, route, Miller said at the time.

"Gazprom has made a new proposal of the base price due to a reassessment of the [costs] of the Altai pipeline," Miller told reporters.

"For several months, we've been conducting a very thorough study to optimize expenditure. The key aim was, on the one hand, to keep the price at a level similar to that in Europe, and on the other hand, to reduce the price of gas somewhat on the Sino-Russian border," Miller said Friday, without elaborating.

Moscow and Beijing signed a contract in 2010 for 30 Bcm/year of gas to be sent to western China from 2015 via the western Altai route, while a 2006 initial agreement also allowed for 38 Bcm/year of additional gas to be piped from eastern Siberia to eastern China.

China's preference has been for gas to be delivered via the eastern route -- close to major eastern coastal demand centers -- as it would reduce transport costs significantly.

However, talks over the actual supplies stalled over the price issue.

In late October, Gazprom took a final investment decision on the development of the Chayandinskoye, or Chayanda, project in the Russian Republic of Sakha (Yakutia) in East Siberia, and construction of a pipeline linking the field to the port of Vladivostok.

Gazprom said it is planning to spend Rb430 billion ($13.7 billion) on developing Chayandinskoye, and a further Rb770 billion on a pipeline which will run from Yakutia to Vladivostok via Khabarovsk.

The pipeline is set to have a capacity of 61 Bcm/year of gas and come online in late 2017.

Under the FID, the development of Chayanda's crude oil rim is scheduled to start in 2014 and that of the field's gas deposits in 2017.

--Dina Khrennikova, dina_khrennikova@platts.com
--Edited by Jonathan Dart, jonathan_dart@platts.com

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