The Gazprom Head Office today has hosted a working meeting between Alexey Miller, Chairman of the Gazprom Management Committee and Chen Geng, President of China National Petroleum Corporation (CNPC).

The parties addressed the progress with the implementation of the Protocol on Natural Gas Supply from Russia to the PRC.

The parties kept agreeing on the terms of gas deliveries from Russia to China via the Western and Eastern routes, with the first direction being a priority.

Alexey Miller and Chen Geng expressed a common opinion that the commercial talks were progressing fruitfully.

Special attention was paid to increasing energy demand and associated import growth in China. To this end, organizing natural gas import from Russia is of particular significance. The parties noted that gas from Russia could only be supplied via an integrated export channel on the condition that first priority was given to meeting gas demand of Russian consumers.

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Currently making up 2 per cent in China’s primary energy mix, the share of natural gas may grow to 10 per cent within the next 5 years. Natural gas will be used in China’s residential sector as industrial fuel and feedstock for the chemical industry as well as for power generation purposes.

Being China’s largest 100 per cent state owned oil and gas business, China National Petroleum Corporation (CNPC) is a leading integrated oil and gas company of the world.

Gazprom and CNPC sealed the Agreement for Strategic Cooperation on October 14, 2004 in Beijing. The Agreement covers a wide spectrum of joint businesses including scrupulous discussion of issues relative to the organization of Gazprom’s natural gas deliveries to the PRC. To steer the Agreement implementation, the parties set up a Joint Coordinating Committee. The Committee resolved to set up a Joint Working Group as well as working groups for major joint businesses.

On March 21, 2006, Gazprom and CNPC inked in Beijing the Protocol on Natural Gas Supply from Russia to the PRC, which fixed the major accords on the gas supply timing, amount and routes (Eastern and Western), and gas price formula principles.

Before end of 2006 the parties plan to finalize the commercial talks about the terms of Russian natural gas supply so as to possibly initiate gas deliveries via the Western route as early as in 2011.