Negotiations aimed at sending Russian gas to China through a $40-billion project including a pipeline to be built through Russia's Central Asian Altai region or the so-called western route failed on 14 October because the two sides could not agree on financial terms, Interfax reported citing a Chinese National Petroleum Corporation (CNPC) official involved in talks with Russian gas monopoly Gazprom.
But a spokesman for Gazprom said negotiations between his company and CNPC are progressing on other fronts. "Discussions on gas deliveries to China are continuing and at the present stage the only topic of discussion is the delivery of gas along a western route," Gazprom spokesman Sergei Kuprianov said, referring to a proposal to deliver product to China's Xinjiag and adjacent eastern province.
Financing was to have come from Chinese companies – though those firms later refused to invest once they determined how low their return would be, the report said. Gazprom then offered to reduce wholesale prices of gas moved through the network, but this offer was also rebuffed. On the other hand, Gazprom had signalled that it might start discussing the eastern route, the source said. The Russian negotiators asked their Chinese partners how they viewed the delivery price and in what form were they prepared to talk part in the project.
China is interested in taking part in a project for the building of a gas pipeline from Russia to South Korea, and the province of Liaoning might play a role in the project as a transit territory. The source said that CNPC and ExxonMobil have already struck agreement and the price of gas from Sakhalin-1. He estimated that after needs in Russia's Far East are met gas exports to China could amount to five billion cubic metres per year. He also said CNPC is interested in taking part in the opening of the Kovykta and Chayanda deposits in Eastern Siberia.
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