Russia's gas giant Gazprom expects to reach an agreement on the price of gas to be supplied to China via the eastern route in June, and sign a deal by the end of this year, Gazprom chairman Viktor Zubkov said in the full version of a TV interview with Rossiya 24 broadcast Wednesday.
"I think that some time in June, the final price [of gas to be supplied to China] will be determined, and by year-end, all the documents regarding the agreed supply volumes and the price will be signed," Zubkov said.
Gazprom and China National Petroleum Corporation, or CNPC, signed Friday a memorandum of understanding on Russian pipeline gas supplies via the eastern route from East Siberia.
Under the 30-year deal, supplies are expected to start in 2018 at a rate of 38 billion cubic meters/year, with a possibility to increase volumes to up to 60 Bcm/year, Gazprom CEO Alexei Miller said at the time, adding that there is a possibility of pre-payment for the gas supplies.
Ratings agency Fitch said Tuesday the gas deal "will dramatically improve [Gazprom's] position in Asian gas markets, which is currently represented only by a 50% share in the 9.6 million mt/year Sakhalin-2 project."
Gazprom had previously expected to sign a final contract on supplies of 30 Bcm/year of pipeline gas over 30 years via the so-called western route, from West Siberia to western China, in mid-2011, but that project was repeatedly delayed as the parties failed to agree on a gas price.
Earlier this year, Gazprom also approved a decision to build a three-train, 15 million mt/year LNG plant in the Russian Far East near Vladivostok, with the first train to be commissioned in 2018, and plans to supply LNG from there to Asian markets.
SUPPLIES TO EUROPE
Despite focusing more strongly on Asian gas markets, Gazprom also looks to expand its energy cooperation with Europe, Zubkov said Wednesday.
In particular, Gazprom is ready to supply around 40 Bcm/year of gas to the UK, meeting the country's domestic gas demand, he said.
"Gazprom can supply such gas volumes [to the UK] in full," Zubkov said.
Currently, Russian gas accounts for around 10% of the UK gas market.
In late 2012, the Moscow office of UK major BP said the company was looking into technical aspects of joining the project to build an extension of the Nord Stream gas pipeline to the UK.
"We are holding consultations although nothing concrete has been decided yet, the discussions are at a very early stage," the spokesman for BP's Moscow office said at the time, declining further comment.
The first two lines of the Nord Stream pipeline, which runs from Russia to Germany across the Baltic Sea, each have a capacity of 27.5 Bcm/year.
Project descriptions for another two lines, which are currently under governmental consideration, envision doubling the pipeline capacity.
"The third line will deliver first gas in 2017 and the fourth line, if we decide to to build it, in 2018," Paul Corcoran, finance manager for Nord Stream pipeline company, said in early 2013 at an industry event.
Gazprom's natural gas exports to Europe fell 7.5% year-on-year to 138.8 Bcm in 2012.
While Gazprom blamed difficult trading conditions, and specifically low gas demand, for its poor results last year, analysts said earlier this year that the company's rigid pricing policy -- based mainly on oil-indexed prices -- resulted in a fall in sales.
