Gazprom and CNPC discuss progress of project for Russian gas supplies to China via Far Eastern route

September 7, 2022

Alexey Miller (center) during meeting

A working meeting between Alexey Miller, Chairman of the Gazprom Management Committee, and Dai Houliang, Chairman of the Board of Directors of CNPC, took place via a video call at the Eastern Economic Forum 2022

The parties reviewed the state and prospects of cooperation between the companies in a wide range of activities. It was highlighted that the collaboration between Gazprom and CNPC is strategic in nature and is advancing in a consistent manner.

The meeting touched upon the project for pipeline gas supplies from Russia to China via the Far Eastern route. It was noted that the key technical parameters of supplies are already outlined and Gazprom is in the process of designing the gas pipeline.

Particular attention at the meeting was paid to the Power of Siberia 2 gas pipeline in Russia and the Soyuz Vostok gas pipeline in Mongolia, which will link the Russian and Chinese gas transmission systems.

Alexey Miller also informed Dai Houliang of the status of works on the project for gas supplies via the eastern route, i.e. the Power of Siberia gas pipeline. Construction of the linear part of the gas pipeline stretching from the Kovyktinskoye field in the Irkutsk Region to the Chayandinskoye field in Yakutia is almost 100 per cent completed. As planned, Power of Siberia will start receiving gas from Kovyktinskoye before the end of this year. This will allow Gazprom to fulfill its contractual obligations on increasing its gas supplies to China in 2023.

Also at the meeting, the parties signed additional agreements to the Sales and Purchase Agreement for Russian gas to be supplied via the eastern route.

Pursuant to the new documents, inter alia, settlements for Russian gas supplies to China will now be made in the national currencies of the two countries, i.e. the ruble and the yuan.

“The new payment mechanism is a mutually beneficial, timely, reliable and practical decision. I believe that it will make settlements easier, serve as a great example to other companies, and give a new impetus to our economies,” said Alexey Miller.

Background

The Eastern Economic Forum 2022 is taking place on September 5–8 in Vladivostok. The main theme of this year’s Forum is “The Path to a Multipolar World.”

Gazprom’s main partner in China is CNPC, a state-owned oil and gas company.

In 2014, Gazprom and CNPC signed the 30-year Sales and Purchase Agreement for 38 billion cubic meters of gas per year to be supplied via the eastern route (Power of Siberia gas pipeline). The ceremony marking the start of the first-ever pipeline supplies of Russian gas to China took place on December 2, 2019.

February 2022 marked the signing of the long-term Sales and Purchase Agreement for natural gas to be supplied via the Far Eastern route. As soon as the project reaches its full capacity, the amount of Russian pipeline gas supplies to China is going to grow by 10 billion cubic meters, totaling 48 billion cubic meters per year.

In 2020, Gazprom started to assess the possibility of supplying gas to China across Mongolia in the amount of up to 50 billion cubic meters of gas per year. In February 2022, design and survey works commenced as part of the Soyuz Vostok gas trunkline construction project. The trunkline will become an extension of Russia’s Power of Siberia 2 gas pipeline in Mongolian territory.