* China says offering “new model” for gas dealings
* Proposal made by heir apparent to Chinese premier
* Price dispute has stymied deal between producer, consumer
(Recasts, adds remarks by Chinese energy official)
By Melissa Akin and Gleb Bryanski
MOSCOW, April 28 (Reuters) – Chinese energy officials
signalled on Saturday they were keen to pursue a major gas deal
with Russia despite a proliferation of alternative supplies, and
said they had made a new proposal to overcome a price deadlock.
Talks between China, the world’s fastest growing energy
consumer, and Russia, the world’s largest conventional gas
producer, fell apart late last year when China, frustrated by
years of stalemate over price, increased its supplies from rival
producer Turkmenistan.
A senior energy official visiting Moscow as part of a
delegation led by Chinese Vice Premier Li Keqiang, who is on
track to succeed Premier Wen Jiabao, told reporters China had
proposed a new model for cooperation on gas during the visit.
“Now all that remains is the question of prices,” said Liu
Tienan, the head of China’s National Energy Administration.
He said Li had presented “a completely new model of
development of cooperation … in the natural gas sphere, and
received a positive assessment from the Russian side.”
“We are interested in the companies of our two countries
beginning discussions and consultations on this issue under the
new model of cooperation.”
Earlier in the day, the chairman of China National Petroleum
Corp. (CNPC), Jiang Jiemin, reiterated to an economic
conference that most of the key points of a gas deal were
agreed.
“We have signed a buy-sell agreement with Gazprom,” Jiang
said, singling out the deal among successful ventures including
a loans-for-oil deal, under which China receives 300,000 barrels
per day via a dedicated pipeline, and joint oil exploration in
Siberia.
Under the terms of the gas deal, which was nearly finalized
last year, Russia would sell up to 68 billion cubic meters of
pipeline gas per year to China, more gas than it ships to any
single European customer.
The two countries had agreed on everything but price and
appeared on the brink of a final agreement a year ago when
Chinese President Hu Jintao was preparing to come to Russia for
an annual investor showcase in St. Petersburg.
But Russia’s gas export monopoly Gazprom refused
to accommodate Chinese price demands, arguing it could sell the
same gas to Europe for a higher profit than the Chinese offer
had implied.
Frustrated by the long-running standoff, China opted to buy
extra gas from the former Soviet state of Turkmenistan, and
backed up its choice with a decision to build a pipeline to
accommodate more Central Asian gas.
A Gazprom source said before the Chinese visit that talks
had not progressed, nor had the company reduced its asking price
for pipeline gas deliveries to China.
Analysts have said China could not afford to pay Russia’s
asking price without raising domestic rates and eroding its
competitive advantage in manufacturing.
“As always in the course of big work there are issues which
require additional attention, but we have learned to do it the
way close friends do,” President-elect Vladimir Putin said on
Friday after Gazprom chief executive Alexei Miller met Jiang.
“We are looking for compromises and are finding them,” Putin
said at a meeting with Li, also attended by Russia’s top energy
official, Deputy Prime Minister Igor Sechin and Energy Minister
Sergei Shmatko.
Russia’s government – increasingly wary of Gazprom’s
dependence on pipelines which bind it to specific customers, and
particularly of increasingly competitive European markets – has
meanwhile ordered Gazprom to build new coastal plants to liquefy
gas for delivery by tanker.
But Russia’s nascent LNG strategy may not yield substantial
sales to China, because Russia’s sources of gas, except the
fields off the Pacific island of Sakhalin, are far from the
potential sites of coastal LNG plants, far from Asian markets,
or both, which could make them too costly to compete.
China is pursuing unconventional gas production at home and
is confronted with a widening array of potential import options,
from Central Asian pipe gas to the shale fields of the United
States, whose gas could be liquefied for export.
(Additional reporting by Olesya Astakhova; Editing by Andrew
Heavens)
