News & Reports News Year 2010 December , 2010 Russia, China divided over gas pricing

Russia, China divided over gas pricing

Russia and China have failed to narrow down their differences over natural gas pricing in their recent talks in St. Petersburg between the two countries' prime ministers.
In 2006, Russia signed an accord with China on annually supplying at most 70 billion cubic meters of natural gas to Beijing, but the prospect of reaching an agreement between the two countries receded significantly after Moscow put the price at $300 per thousand cubic meters.

China's expected price is below $200 per thousand cubic meters, $100 below the price offered by European Union buyers.

The negotiations have remained at a stalemate ever since, however, Chinese Prime Minister Wen Jiabao traveled to Moscow last week to sort out the differences, which have prevented the contract from being carried out.

Meanwhile, Russian Deputy Prime Minister Igor Sechin said in St. Petersburg, where the Chinese premier met his counterpart Vladimir Putin that the neighboring countries are unlikely to reach a price agreement before mid-2011, a report by Bloomberg says.

The remarks come as Russia had agreed to supply 30 billion cubic meters of gas annually to China from 2015 onwards via the Altai gas pipeline in Siberia under an agreement signed by Russian President Dmitri Medvedev earlier this year.

"The talks between Gazprom and China National Petroleum Corporation on the prospects of supplies of Russian natural gas to China are going successfully," Putin said.

Bilateral trade between the two countries has been flourishing in recent years and the amount for the first ten months stands at $42 billion, a growth of 56 percent over last year.