Russian Gas Supplies to China Priced without Linkage to Henry Hub

Russia’s Gazprom and China National Petroleum Corporation (CNPC) are expected to sign a long-term contract by the end of the year, with the Russian gas sold to China at a price independent of Henry Hub, said Alexey Miller, Chairman of Gazprom’s Management Committee.

“The price of gas to be supplied to China won't be linked to the US spot market prices,” said Miller after the negotiations with Zhou Jiping, president of CNPC, according to a note released by Gazprom on Wednesday.

In March 2013, Gazprom and CNPC signed a memorandum of understanding to cooperate in pipelines gas supplies to China via the eastern route.

CNPC is the largest state-owned petroleum company in China (the Government holds a 100 per cent stake) and is one of the world's leading integrated oil and gas production companies.

The Chinese company can alleviate the problems of Gazprom, whose need for long-term deals is becoming a pressing matter following the US shale gas revolution and the rise of LNG projects in Europe. Russia is now gearing up projects to increase its presence in Asia.