Russia says to sign China gas deal by mid-2011

27th September 2010, Comments 0 comments

A deal for Russia to supply natural gas to China is expected to be signed by mid-2011, Russian Deputy Prime Minister Igor Sechin said Monday, calling cooperation in the area "strategically promising".

Sechin, Russia's powerful energy czar, is accompanying President Dmitry Medvedev on a three-day visit to China, with energy cooperation one of the key focal points of the talks between the neighbours.

Russia's Gazprom, the world's largest gas producer, signed a framework agreement with China National Petroleum Company (CNPC) last year that could see about 70 billion cubic metres of gas sent to China annually.

But while Gazprom has said the two sides have agreed on key supply terms, a pricing mechanism has not yet been set.

"We believe that the signing of commercial contracts would take place before the middle of next year," Sechin told reporters.

"The talks will continue," he added, noting the two sides were "in the process of agreeing separate parametres," without providing specifics.

Sechin, a close ally of Russian Prime Minister Vladimir Putin who is also the chairman of the board of directors of state-owned oil group Rosneft, said Russia had sufficient natural gas reserves to fulfil China's growing needs.

"Cooperation between Russia and China in the gas sphere is strategically promising. In this sense, Russia is a natural partner for China," Sechin said.

China currently relies on highly-polluting coal for 70 percent of its fast-growing energy needs.

© 2010 AFP

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