Gazprom Says Its China Focus Is Gas Supply, Not Output Ventures

OAO Gazprom (OGZD), the world’s largest natural gas producer, will focus on building exports to China, without bringing partners from the neighboring country into drilling projects.

Gazprom isn’t considering Chinese companies to help develop its gas fields in Russia, Deputy Chief Executive Officer Vitaly Markelov told reporters yesterday in Moscow. “We’re not looking at that,” he said, in response to a question. “We’re talking about gas supplies with Chinese companies.”

Russian President Vladimir Putin is turning to Asia as financing from the U.S. and European Union tightens and capital outflows surge because of tensions over Ukraine. China, Russia’s largest trading partner with $94.5 billion of business last year, was the only country in the United Nations Security Council not to censure Putin’s actions in Ukraine.

Gazprom is preparing a supply contract with China, which it aims to sign when Putin visits the Asian nation next week, Deputy Energy Minister Anatoly Yanovsky said on May 12. The company plans to deliver as much as 38 billion cubic meters of gas to China no sooner than the end of 2018, after more than a decade of talks and false starts.

The contract is 98 percent ready, Yanovsky said.

While Gazprom has few foreign partners at production sites in Russia, OAO Rosneft (ROSN), the state-run oil producer, has signed a spate of deals with U.S., European and Asian companies as it seeks to ramp up exports. In October, Rosneft said it plans to sell China National Petroleum Corp. a 49 percent stake in an East Siberian oil production venture, after the two signed a $270 billion, 25-year oil supply deal earlier in the year.

PetroChina Co. (857), CNPC’s publicly traded unit, is interested in spending at least $10 billion for a minority share of East Siberian gas fields operated by Gazprom and Rosneft, people with knowledge of the matter told Bloomberg in September.

To contact the reporter on this story: Elena Mazneva in Moscow at emazneva@bloomberg.net

To contact the editors responsible for this story: Will Kennedy at wkennedy3@bloomberg.net Torrey Clark, Tony Barrett

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