Gazprom PJSC, the world’s biggest natural gas supplier, is shifting the goalpost for signing a firm contract with China to supply gas from Western Siberia under a deal that would make the Asian nation Russia’s biggest customer for the fuel.
The agreement could be signed in spring or “a little bit earlier,” Gazprom Chief Executive Officer Alexey Miller told reporters in Beijing on Thursday, during a visit by President Vladimir Putin to China. The state-run company’s previous target was the end of the year.
Putin clinched Russia’s first contract to supply East Siberian gas to China last year in a $400 billion deal marking a pivot toward Asia as its relations with the U.S. and the European Union soured over the conflict in Ukraine. Gazprom planned to follow that deal with another 30-year contract to ship gas from West Siberian fields used to supply EU clients.
The West Siberian contract may have a value of about $170 billion at current prices, according to Maxim Moshkov, a UBS Group AG analyst in Moscow. Talks about supplies to China started more than a decade ago, stalling amid disagreements on pricing and terms for financing.
Gazprom instead signed a memorandum of understanding with China on Thursday about a possible third gas pipeline from the Sakhalin region in Russia’s Far East. The project may take five years, Miller said.
While the terms of the Far East link are yet to be determined, Miller said the new accord showed China is interested in additional gas from Russia.