Gazprom, CNPC Ink Eastern Route Pipeline Terms

October 2013, Vol. 240 No. 10

Alexey Miller, chairman of the Gazprom Management Committee, and Zhou Jiping, chairman of China National Petroleum Corp. (CNPC), signed an agreement outlining the terms and conditions of pipeline gas supply from Russia to China via the eastern route pipeline.

The signing ceremony in St. Petersburg took place with Russian President Vladimir Putin and Chinese President Xi Jinping participating.

All the major terms and conditions of future Russian natural gas supplies to the Chinese market via the eastern route were agreed on, namely, the export volume and starting date, the take-or-pay level, the period of supply buildup, the level of guaranteed payments, the gas delivery point on the border and other basic conditions of gas offtake.

In another deal between Russia and China, CNPC acquired a 20% stake in Novatek’s major Arctic LNG project. The deal follows a tentative agreement about the purchase, which the companies reached in June. Paying an undisclosed sum, CNPC now joins France’s Total as a partner of the $20 billion Yamal LNG project.

Novatek chief Leonid Mikhelson said the project gained a “strong partner.” Novatek, which is now left with 60%^ of the venture, could bring on another partner before the end of this year, Mikhelson told reporters. The company is negotiating with several candidates, he added. Novatek said earlier it would be content with 51% of Yamal LNG.

Yamal LNG plans to build a plant to make 16.5 million metric tons of LNG a year and start shipments in 2016. The project requires construction of an airport and port on the Arctic Ocean.

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