Gazprom, CNPC Sign Gas Related Agreements

Russia's Gazprom signed a memorandum of understanding with China National Petroleum Corporation and China Huaneng Group at the Belt and Road Forum in Beijing, aimed at pursuing joint efforts in the gas sector, including the possibility of the three companies building thermal power plants in China, Gazprom said May 15.

Gazprom also signed three contracts to conduct pre-development surveys for building underground gas storage facilities in China's Heilongjiang and Jiangsu provinces, Gazprom said. This follows a contract signed in February 2017 between Gazprom and CNPC to do geotechnical surveys for the building of UGS facilities.

Gazprom is committed to help China bring its plans to develop its gas market to fruition, the company's CEO Alexey Miller said at a roundtable on oil and gas cooperation held May 16 by CNPC at the Forum.

At the moment, Gazprom is building the Power of Siberia gas trunkline as part of a project aimed at getting Russian gas supplies to China. As of May 16, 745 kilometres of the pipeline has been built with 1,009 km welded in one string. Gazprom is negotiating future gas deliveries from Russia's Far East. An agreement on the supply terms is expected by the end of 2017.

Miller also underlined the potential of Russian-Chinese interaction in the use of LNG as a vehicle fuel. The Silk Road Economic Belt project proposed by the Chinese government entails the creation of the Europe–Western China international transport corridor, which will stretch for some 2,300 km just in Russian territory. On May 15, Gazprom, CNPC, Russian Highways, and China Communications Construction Company inked a memorandum of cooperation aimed at developing road infrastructure and promoting the use of LNG as a vehicle fuel along the aforementioned route.

“Gas pipelines not only bring heat to homes, but also serve as a common thread for different economies, helping them thrive and develop. There is no doubt that the steel arteries of our gas trunklines, along with transport corridors running for thousands of kilometers, will become a symbol of the ever-growing strategic cooperation and connectivity between Russia and China in the 21st century,” Miller said during his speech at the event. 

China is one of the world’s largest natural gas consumers. And, while the share of gas in the country’s energy mix is a mere 6%, the Chinese government intends to raise that figure to about 19% by 2020. 

Shardul Sharma