Russian Gazprom to maintain oil-indexed pricing for gas supplies to China
Moscow (Platts)--19Jun2013/729 am EDT/1129 GMT
Russia's Gazprom has no plans to link the price of gas to be supplied to
China under a long term contract to US spot gas prices, the company said in a
statement Wednesday, citing Gazprom CEO Alexei Miller.
"[Price of] gas supplied to China will not be linked to prices at the
[North] American spot market," Miller was quoted as saying following his
Tuesday meeting with president of China's CNPC, Zhou Jiping.
Currently, Gazprom's long-term gas deliveries are oil-indexed. This has
led a number of its European clients to complain about the pricing levels.
As a result in 2012, Gazprom agreed to renegotiate prices for several
European gas buyers and further re-negotiations are expected this year as
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At their Tuesday meeting, Miller and Jiping discussed the long-term gas
supply agreement which is planned to be signed by the end of this year,
Gazprom's statement said.
Last week, speaking about the progress of the talks with CNPC, head of
Gazprom Export, Alexander Medvedev, said the two parties agreed on all key
points of the contract except the basic gas supply price that will be used in
the pricing formula.
Asked whether the partners would reach an agreement on the price this
month, as Gazprom executives projected earlier, Medvedev said: "If the
upcoming [round] of the talks is successful, the signing will take place."
Gazprom is prepared to provide China with discounted gas provided China
pays in advance for the gas, Medvedev added, providing no further details.
In March, Gazprom and CNPC signed a memorandum on understanding to start
pipeline gas supplies to China in 2018, at a rate of 38 billion cubic
meters/year. The agreement includes a possible increase in volumes to as much
as 60 Bcm/year.
The deliveries, over 30 years, will be made via the so-called eastern
route from East Siberia.
Gazprom had previously expected in mid-2011 to sign a final contract to
supply 30 Bcm/year of pipeline gas over 30 years from West Siberia to western
China but that project was repeatedly delayed as the parties failed to agree
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