China – Gazprom’s strategic partner

A working meeting between Alexey Miller, Chairman of the Gazprom Management Committee, and Han Zheng, Vice-Premier of the State Council of the People’s Republic of China, took place in Moscow today.

The parties addressed the issues of strategic cooperation in the energy sector, reviewing, inter alia, the progress of the Power of Siberia project. The construction of the gas pipeline, the development of the Chayandinskoye field and the creation of the Amur GPP are proceeding on schedule.

It was noted that China continued to ramp up natural gas consumption. The country’s demand for gas imports grows as the increasing consumption outpaces the indigenous production. The parties discussed the project for gas supplies from the Russian Far East and the issue concerning the intensification of negotiations on the western route.

The joint efforts aimed at promoting wider use of natural gas as a vehicle fuel were another subject of the meeting.

In addition, the parties considered the ongoing cooperation in gas-fired power generation, underground gas storage and LNG supplies. In 2017, China accounted for 19 per cent of the Gazprom Group’s total LNG supplies, with 0.62 million tons, a 9-fold rise compared to the amount of deliveries in 2016 (0.07 million tons), exported to the Republic.

Background

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

On May 21, 2014, Gazprom and CNPC signed the Sales and Purchase Agreement for Russian gas to be supplied via the eastern route (Power of Siberia gas pipeline). The Agreement provides for gas deliveries to China in the amount of 38 billion cubic meters per year.

In 2016, Gazprom and CNPC signed the Memorandum of Understanding on underground gas storage and gas-fired power generation in China and the Memorandum to explore the opportunities for cooperation in the NGV sector.

In July 2017, Gazprom and CNPC inked the Supplementary Agreement to the Sales and Purchase Agreement for gas to be supplied via the eastern route inked in 2014. According to the document, gas supplies will commence on December 20, 2019.

In December 2017, Gazprom and CNPC signed the Heads of Agreement for natural gas to be supplied from Russia’s Far East to China.

On May 15, 2017, Gazprom, CNPC, the Russian Highways State Company and China Communications Construction Company inked the Memorandum of Cooperation as part of the effort to develop the Europe – China international transport route. The document is aimed at fostering cooperation between the companies in developing road infrastructure and promoting the use of liquefied natural gas as a vehicle fuel along the aforementioned route.

The Gas into Motors NGV rally powered by LNG is underway now. This joint project of Gazprom, CNPC and KazMunayGas is meant to contribute to the development of gas filling infrastructure within the emerging Europe – China international transport corridor and to vividly demonstrate the benefits of using gas-powered vehicles on a transcontinental motor route. The Gas into Motors rally started on September 4, 2018, in Rudong, China and will conclude on October 4 in St. Petersburg, Russia.