Russia's Gazprom Sign Gas Supply Agreement
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[May 21, 2014]
SHANGHAI (Reuters) - China and
Russia signed a long-awaited natural gas supply deal on Wednesday,
securing the world's top energy user a major new source of the
clean-burning fuel and opening a market to Moscow as Europeans look
elsewhere for their energy.
The deal would see Russia supply 38 billion cubic meters (bcm) of
gas to China each year for 30 years under a contract valued in
excess of $400 billion overall.
The gas will be transported along a new pipeline linking Siberian
gas fields to China's main consumption centers near its coastline.
Russian President Vladimir Putin and Chinese counterpart Xi Jinping
witnessed the deal in Shanghai between Russian state-controlled
company Gazprom and China National Petroleum Corp (CNPC).
Gazprom declined to disclose what price was agreed, a key hurdle in
talks that have dragged on for more than a decade.
Symbolically, for Putin the agreement represents a major triumph as
he seeks to forge new partnerships in Asia while customers in Europe
attempt to reduce their reliance on Russian gas in the wake of the
crisis in Ukraine.
But from a commercial point of view, much will depend on the price
and other terms of the deal.
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One potential sticking point was whether China would pay a lump sum
up front in order to fund some of the infrastructure costs, but as
yet that element of the agreement remains unresolved, Gazprom's CEO
Alexei Miller said.
Shares in Gazprom rose almost two percent in reaction to the
announcement of the deal.
(Reporting by Alexei Anishchuk, Writing by Chen Aizhu and Fayen
Wong; Editing by Mike Collett-White)
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