Russia, China Sign Intergovernmental Gas Deal

Russia and China have signed an intergovernmental agreement on pipeline gas supplies via the "Far Eastern Route," according to a related document prepared by the Russian Energy Ministry.

The document mentions that the intergovernmental agreement was signed by both countries on Jan. 31.

The agreement defines key parameters of a 10 billion cubic meter per year gas supply contract signed by Russia's Gazprom and China National Petroleum Corp. (CNPC) in February 2022.

It gives state-controlled gas giant Gazprom the exclusive right to supply gas to China via the cross-border section of the Far Eastern Route.

The cross-border section will stretch from the Sakhalin-Khabarovsk-Vladivostok pipeline and run across the Ussuri River near the Russian border town of Dalnerechensk, which lies north of Vladivostok.

It also notes that Russia and China are committed to supporting the use of their national currencies for payments under the contract.

The Far Eastern Route contract is the second gas supply deal between Russia and China, following the 38 Bcm/yr Power of Siberia contract signed in 2014.

Supplies via Power of Siberia started in late 2019, but it is not yet clear when supplies via the Far Eastern Route will start.

The contract is part of Russia's plans to expand its gas exports to Asia — plans which have become increasingly important for Moscow after its invasion of Ukraine almost a year ago.

The war led to a series of international sanctions against Moscow and the loss of most of its traditional pipeline gas exports to Europe.

China remains central to Gazprom's diversification efforts. Russia is also talking to Beijing about a 50 Bcm/yr contract with CNPC to export gas via the proposed Power of Siberia 2 pipeline and a transit section in Mongolia dubbed Soyuz Vostok.

Apart from monetizing new gas resources in East Siberia, Power of Siberia 2 would also take gas from West Siberian fields, which have traditionally supplied Europe and Russia's domestic market.

Gazprom is also looking for opportunities to increase domestic gas consumption and find new markets in Asia, including Central Asia.

It is also keen to keep exporting pipeline gas to Europe via a proposed gas hub in Turkey.

Turkey had been planning to hold a summit in Istanbul on Feb. 14-15 to discuss the hub with potential gas suppliers and buyers.

However, sources tell Energy Intelligence that the summit has been postponed until the second half of March because of the deadly earthquake that hit Turkey and Syria earlier this week.

Russia's Eastern Gas Pipelines