During the Russian president’s visit to China, Mar 21, Chinese CNPC and Russian Gazprom signed a memorandum on Russian gas supplies to China. Russian President Vladimir Putin said that Russia is ready to lay a gas pipeline “Altay” and will supply China with 60-80 bln c m of gas a year from Eastern and Western Siberia.

 

Russian President Vladimir Putin said that the Russian gas will be supplied to China by two routes: from Eastern and Western Siberia. “We have agreed on volumes from both sources – 30-40 bln c m a year from each,” Putin told journalists after a meeting with Chinese President Hu Jintao.

 

A source from the Russian delegation said that this gas pipeline project will cost some $10 bln. “Russia will build the pipelines on its own,” Gazprom President Alexei Miller said.

 

The cost of the gas supplies to China will depend on the world oil prices like is the case in Europe, Miller said. “In rather hard talks Gazprom and CNPC have agreed on a mutually acceptable price formula,” the source said.

 

Miller confirmed Putin’s words that the first Russian supplies to China will be made from Western Siberia. “The western route is more convenient – it will not require big investing in the volumes we have agreed on in the protocol,” Miller said.

 

Many European experts say that Gazprom will hardly afford supplying gas to both Europe and Asia. Gazprom, who ensures ¼ of gas supplies in Europe and simply dominates in Eastern Europe, may fail to supply as much as it has pledged to. The Western Siberian fields are running out and may fail to “hack it” for both Europe and China.

 

Putin said that the Eastern Siberian route is also an option – but not a priority — for both Gazprom and the Russian government. “Western Siberia is a quicker and easier way to supply gas, and so, Eastern Siberia is just the second stage of our energy cooperation,” Putin said.