Falling oil prices slows down a new deal between Russia and China on gas supplies. The market price of gas is not greater than $ 200 for 1 thousand. Cubic meters, but to recoup the construction of a new gas pipeline to China, it should be about twice as high as what the Chinese do not agree. According to experts, China’s position in the negotiations advantageous to Russia – China can afford to wait.
Oil collapsed complicated negotiations between Russia and China on gas supplies, said the head of the department of Eastern Europe and Central Asia of the Ministry of Commerce of China Ji Lin. At the same time on Tuesday “Gazprom” reported that the talks “have good momentum” and the basic conditions are determined.
This is the supply of so-called “western route” (the pipeline “Strength Siberia – 2 “, formerly” Altai “). According to preliminary agreements on this pipe, China will receive 30 billion cubic meters of Russian gas a year for 30 years. Negotiations have been conducted for the first year, the contract for the “eastern route” (the pipeline “Power of Siberia”) has already been signed with China, but sharply pushed down oil prices does not allow the parties to reach a consensus on the issue of gas prices. The fact that the prices of long-term contracts, “Gazprom” are tied to oil quotations.
The cost of North Sea oil brand Brent, which is tied to the price of Russian Urals, came close to the mark of $ 45 per barrel, but has not crossed that line. The last time the price of a barrel was below $ 45 during the crisis period 2008-2009.
In recent years, “Gazprom” has repeatedly made concessions to its European counterparts by introducing a price formula spot component. That is part of the price of the contract has come to depend on the level of prices on the European market, one-off contracts. Negotiations with China still on the “eastern route” brought a lot of difficulties the Russian side – because of disagreement on the issue of pricing.
«Gazprom” I wanted China to buy gas at the price of European exports of the Russian monopoly. The Chinese offered in response to focus on the price of gas on the US Henry Hub. In May last year, the parties signed a contract yet, according to which 38 billion cubic meters of gas per year, supplied by “Power of Siberia” for 30 years, will cost China $ 400 billion in.
contract price of 1 thousand. cubic meters of neither Russia nor China has not officially disclosed, but on the basis of the volume of the average price of deliveries was to be about $ 350 . At the time of signing the agreement the price was close to the average level of European exports and greater than Henry Hub price of approximately $ 100 per thousand cubic meters.
But in November 2014, when the fall in oil prices was only slightly more than 30% and the price per barrel fluctuated in the range of $ 74-79 (compared to $ 110 in July ), the gas market, experts have warned that the contract “Gazprom” with China “lost” at least $ 100 billion.
At the moment, oil quotes have fallen by more than half. According to head of East European Gas Analysis Mikhail Korchemkin at today’s pricing environment Chinese might sell only gas from the Kovykta field (and this is just “Eastern Route”, under which the contract has already been signed. – “Times”). “Provided that the pipeline will be laid on the initial short route along the railway to Harbin,” – emphasizes the expert.
Then, according Korchemkina, the cost of gas may be lower than $ 200 per 1 thousand. cube. Otherwise, if the “Power of Siberia” will be laid on the “long” route, the price of gas for the Chinese to exceed $ 350, higher than the average price of European contracts, “Gazprom».
As for the “western route” by which the contract has not been signed, but now, according to a member of the expert council of the Union of Russian Oil and Gas Eldar Kasayeva, the market price of Russian pipeline gas (including oil prices) for China is $ 180-200.
«It can arrange the PRC, which significantly more expensive liquefied natural gas from Qatar and other states, but not in the economic interest of Russia”, – said the expert.
At the same time China, according to Kasaev can not afford to rush into negotiations with “Gazprom” on the price. Now China is revising the energy balance and trying to calculate the approximate requirements of the country in the gas in the long term.
«Originally planned to increase annual gas consumption in China to 360 billion cubic meters. m in 2020, which is two times higher than last year – says Kasai. – However, in the current year against the general slowdown of the Chinese economy, a sharp slowdown in the growth of gas consumption in the domestic market. ”
«Payback project” Altai “requires doubling the above market price – emphasizes concern. – In this regard in the near future the parties are unlikely to reach a consensus ».
According Kasayeva, investment in” Altai “in the order of $ 7.7 billion.” However, the large infrastructure projects in implementation is generally more expensive “, – experts warn.
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