Price remains hurdle in talks to secure Russian natural gas

Updated: 2014-05-21 06:44

By Du Juan (China Daily)

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Price remains hurdle in talks to secure Russian natural gas

Expectations are high that years of negotiations will pay off with 30-year deal, Du Juan reports

Agreement is still to be reached on the price China will pay Russia for gas, a Chinese official said on Tuesday.

Domestic experts said the country's diversified energy import structure will be unaffected.

Russian President Vladimir Putin's two-day visit to China started on Tuesday. Expectations from both countries are high that about two decades of negotiations will supply China with 38 billion cubic meters of natural gas annually through pipelines.

Price remains hurdle in talks to secure Russian natural gas
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Price remains hurdle in talks to secure Russian natural gas
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Both sides are accelerating discussions, Foreign Ministry spokesman Hong Lei said.

Under the plan, Russia's top natural gas producer, Gazprom OAO, will agree with China National Petroleum Corp to begin supplies from 2018 via the eastern gas pipeline.

Imports will increase to 68 billion cu m when the infrastructure allows.

The deal would last for 30 years. Analysts estimate it is worth $400 billion.

Wang Xiaokun, an analyst at domestic commodities consultancy Sublime China Information Co Ltd, said price remains the core obstacle.

"China has stable natural gas supply from both pipelines and liquefied natural gas imports with a diversified structure," said Wang.

Russia is under the pressure of its growing friction with the West over Ukraine. China has remained neutral. Crimea, which was part of Ukraine, joined Russia this year.

"It is understandable that China wants the price to be lower," said Wang.

Sun Yongxiang, a professor with the Euro-Asian Social Development Research Institute of the State Council's Development Research Center, said the price will be about $380 per 1,000 cu m, which is closer to Russia's export price to Europe.

"The price is higher than we expected," he said.

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