Russia to supply more gas to China via new pipeline

China and Russia are strengthening their energy cooperation. Russian oil giant, Gazprom and China National Petroleum Corporation (CNPC) have signed a new deal under which the Russian gas giant will deliver natural gas to China via the Far Eastern route, Gazprom said.

Gazprom and CNPC signed a long-term Sales and Purchase Agreement for natural gas to be supplied via the Far Eastern route, which will boost the amount of Russian gas supplies to China by 10 billion cubic meters annually, the Russian gas giant said.

“The signing of this document is an important step towards further strengthening the mutually beneficial cooperation between Russia and China in the gas sector,” said Gazprom, which expects total Russian pipeline gas supply to China to reach 48 billion cubic meters per year, including deliveries via the Power of Siberia gas trunk line.

The agreement for the new pipeline, expected to be operational within three years, will be settled in euros, an industry source in Beijing told Reuters. Russia is already sending natural gas via pipeline to China through the Power of Siberia pipeline, which became operational at the end of 2019.

“This is already a second contract to be signed for Russian gas supplies to China, and it is indicative of the exceptionally strong mutual trust and partnership between our countries and companies. Our Chinese partners from CNPC have already seen for themselves that Gazprom is a reliable gas supplier,” Gazprom’s CEO Alexey Miller said, commenting on the deal announced last Friday.

While Russia is bolstering its energy ties with China, it continues to be at odds with the West over Ukraine, while Gazprom’s gas exports to Europe have plunged in recent months. Despite record-high natural gas production, Russia has not been sending much above its contractual obligations to Europe this winter season.

At the same time, the United States and the EU are scouring the world for additional LNG supply that could be sent to Europe in case the Russia-Ukraine crisis escalates into a conflict.

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