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Russian President Vladimir Putin (right) and President of China Hu Jintao (left) attend the Shanghai Cooperation Organization (SCO) summit in June 2006.
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Sep. 16, 2006
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Natural Gas in Exchange for Time
// Altai gas pipeline might make no profits in 2011
During his meeting with Gazprom CEO Alexey Miller, Russian President Vladimir Putin suggested that Gazprom specify when the project to supply natural gas to China by means of the Altai gas pipeline is to be carried out. The pipeline is being designed now. Specification might be the bargaining for price with China: if Gazprom fails to increase the profitability of the project, the date of beginning the supplies might be postponed for 3 or 4 years from 2011.
President Putin met with Gazprom CEO Alexey Miller on Thursday night. Miller reported on planned gas supplies to China according to the memorandum of understanding signed by Gazprom and CNPC in March. Putin announced in spring that 80 billion cubic meters of natural gas are to be sold to China, which was later changed to 68 billion cubic meters.

Gazprom plans to supply first 30 billion cubic meters of natural gas in 2011 by means of the Altai gas pipeline. However, experts believe it is hardly possible to begin supplies to China in 2011, due to the lack of extra gas (beside that for Europe) which could be sent to China. Europe offers no less than $180 for 1,000 cubic meters of Yamal gas. Thus, the price offered by China should be not lower than Europes. Some experts doubt the Altai project will pass the ecological expertise.

Yet, China cannot pay as much as Europe where gas prices range from $280 to $300 for 1,000 cubic meters. Turkmenia and Kazakhstan have already signed agreements with China to supply 50-80 billion cubic meters of gas which is cheaper than Russias.

Natural gas extracted by oil companies might be a solution for Gazprom. However, Gazprom does not hurry to sign contracts with oil companies, and to develop the route for the Altai pipeline. Gazprom said it is now only justifying the investment into the project. Vladimir Putins words about specification of dates might really be addressed to Chinese authorities: the more compliant they are about the price, the sooner Altai pipeline will be constructed.



www.kommersant.com

All the Article in Russian as of Sep. 16, 2006

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