Russia signs $400bn gas supply contract with China

Russia-based Gazprom has signed a contract worth $400bn (€292bn) with China National Petroleum Corp (CNPC) to supply natural gas.

Under the contract, Gazprom will supply 38 billion cubic metres of gas annually to CNPC for a period of 30 years.

The gas will be supplied through a pipeline from Russia to China via the eastern route, which is estimated to start in 2018.

Gazprom will be responsible for gas field development and construction of the gas processing plants and pipeline sections in Russia.

Meanwhile, CNPC will be responsible for the building pipeline sections, gas storages and other supporting facilities in China.

CNPC said that the major gas sources will be Kovyktinskoye in the Irkutsk region and Chayandinskoye in Yakutia.

Gazprom management committee chairman Alexey Miller said Russia and China have signed the biggest contract in the entire history of the USSR and Gazprom - more than 1 trillion cubic meters of gas will be supplied during a whole contractual period.Russian gas will be sold at a brand new market with a huge potential.

Miller said, "The arrangement of Russian pipeline gas supplies is the biggest investment project on a global scale. $55bn will be invested in the construction of production and transmission facilities in Russia.

"An extensive gas infrastructure network will be set up in Russia's East, which will drive the local economy forward. Great impetus will be given to entire economic sectors, namely metallurgy, pipe and machine building."

Gazprom and CNPC have signed the agreement that came after more than a decade of negotiations, which were repeatedly stalled over the price.

The contract was signed in the presence of Russian president Vladimir Putin and Chinese president Xi Jinping.