Russia and China initial massive natural gas deal

2011-6-1

Moscow - Government negotiators on Tuesday reached general agreement on terms for long-term deliveries of gas that will bring Russia a welcome cash infusion and China additional fuel for its energy-hungry economy, a senior Russian official said.

Russia will supply China with natural gas for at least the next 30 years at increasing volumes and will build the capacity to do it, said Igor Sechin, Russian Vice Prime Minister, at a Moscow press conference.

Sechin's remarks came after a day of top-level meetings in the Russian capital between Russian energy officials and their Chinese counterparts.

Russian state media billed the talks as an 'energy summit', between the two countries, who share a 3,600-kilometre land border in Central and Northeast Asia.

Increased Russian natural gas deliveries to China were the main topic, but oil and electricity deliveries also were discussed, Interfax reported.

'The talks brought massive results,' said Chen Gopin, a Chinese Foreign Ministry spokesman.

Russia's national gas monopoly Gazprom will in coming years become a major supplier to China, Sechin said.

Negotiators agreed on Tuesday that Russia will develop the capacity to deliver annually to China some 78 billion cubic metres of gas via Central Asian and Far Eastern pipelines.

The massive project would go far to cover dramatic growth expected in Chinese demand for natural gas, which was around 90 billion cubic metres in 2010, according to news reports.

A Gazprom spokesman speaking at the press conference said the firm would be able to finance the pipeline expansions, some of which would cross some of Asia's most hostile terrain, from its own funds.

Volumes of Russian oil deliveries to China will remain stable, and Russian pricing for oil delivered to China by pipeline - long a sore point with Beijing - 'has been resolved,' Sechin said.

The energy cooperation terms agreed on at the Tuesday conference will likely be finalized in an energy contract to be signed during a visit to Moscow planned by Chinese President Hu Jingtao later this year, Sechin said.

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