Russian, Chinese Gas Giants Sign Deal, Moscow Striving For Top 10 Among Beijing’s Trading Partners

Russian gas giant Gazprom and China National Petroleum Corporation (CNPC) have agreed on basic terms to supply natural gas to China from Russia’s Far East region.

“Today, we laid the basis for another pipeline route of Russian gas supplies to China. The project will expand the range of options for satisfying the growing demand for gas in the Chinese market,” Gazprom CEO Alexey Miller said in Beijing on December 21.

Moscow and Beijing have been cooperating to deliver Russian gas to the China’s growing market by December 2019. Miller’s meeting in China last week underscored the commitment to implementing plans to export gas via Russia’s northern route known as the Power of Siberia. The document signed outlines the basic parameters of future supplies, namely the volumes, the term of the contract, the starting date of supplies, the surge period, and the cross-border point.

In 2014, Gazprom and CNPC signed the sales and purchase agreement for Russian gas to be supplied via the 3,000 km long (1,864 mi) Power of Siberia line, extending from the Irkutsk and Yakutia gas production centers in Russia, in the amount of 38 billion cubic meters, for 30 years annually. By September 2014, Gazprom commenced the construction of the first section of the pipeline, running from the Chayandinskoye deposit in Yakutia to Blagoveshchensk on the Chinese border.

The second phase of the project will include the construction of a section stretching for about 800 km (497 mi) from the Kovyktinskoye deposit in the Irkutsk region to the Chayandinskoye deposit. The third stage provides for expanding gas transmission capacities between the Chayandinskoye deposit and Blagoveshchensk.

Apart from gas, Russia is also striving to become one of the top 10 trading partners of China. Trade turnover between Russia and China for the first 11 months of 2017 increased by 21.8 percent compared to the same period last year, or up to $76.06 billion, according to China’s main customs administration. Chinese exports to Russia during that period increased by 16.6 percent, and imports from Russia by 27.8 percent.

"We have every reason to expect that in general, the bilateral trade will reach $80 billion by the end of the year,” Russia’s ambassador to China Andrey Denisov said in a recent interview with Russian journalists.

“Russia will be ranked the 12th on the list of China's largest trading partners, last year we were 14, so we moved up to two positions," Denisov said.

China, for its part, ranks first among Russia’s trading partners. Raw materials continue to dominate Russia’s exports, and its share of finished products is very small. The ambassador recalled that last year Russia came out on top in terms of oil supplies to China, outstripping Saudi Arabia, and this year the trend remains.

"At least, for 11 months we are consistently ranked first. As for coal, here we came in third place, ahead of Mongolia last year, and have maintained this position this year.”