Gazprom, CNPC sign terms for pipeline natural gas

Gazprom and China National Petroleum Corp. signed an agreement covering major terms and conditions of supplying natural gas from Russia to China via the eastern route, in accordance with terms previously reached. Earlier negotiations covered the supply of 30 billion cu m (bcm)/year over 30 years starting in 2015. Pricing will not be linked to the Henry Hub.

Previous talks focused on Gazprom’s Eastern Gas Program as favorable to the signing of long-term agreements for gas supply from Russia to China. Gazprom began building the Sakhalin-Khabarovsk-Vladivostok (SKV) gas transmission system as a key component of the Eastern Gas Program in May 2009. The 1,830-km pipeline entered service in September 2011 at an initial capacity of 7 bcm/year, expandable to 47 bcm/year.

Gazprom last year began work on production wells in the Kirinskoye gas-condensate field in the Sea of Okhotsk. The company had previously completed a 139-km onshore pipeline to carry processed gas from the field to the SKV system’s Sakhalin main compressor station (OGJ Online, Aug. 6, 2012).

It also last year indicated plans to accelerate work on the Eastern Gas Program, including a pipeline between Yakutia and a tie-in to SKV at Khabarovsk (OGJ Online, Sept. 17, 2012). The 3,200-km pipeline will parallel the Eastern Siberia-Pacific Ocean crude oil trunkline, entering service in late 2017 with an eventual capacity of 61 bcm/year. Gazprom maps published at the time showed plans to export gas to China through this pipeline at Blagoveshchensk and the SKV pipeline at Dalnerechensk.

Contact Christopher E. Smith at chriss@ogjonline.com.

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