Today in Beijing, during the Russian President Putin's visit to the People's Republic of China, Alexei Miller, Chairman of Gazprom's Management Committee, and Chen Gen, President of China National Petroleum Corporation (CNPC) signed an Agreement on strategic cooperation. The Agreement stipulates main directions of the two companies' future cooperation in the natural gas industry.

According to the document, the main direction of cooperation will be the study and realization of projects on Gazprom's supplies of Russia produced natural gas to CNPC. The parties agreed that Russian natural gas supplies to CNPC from the Russian Unified gas supply system will facilitate stability and security of long term supplies of Russian natural gas to China. According to the Agreement, the parties will carry out a concrete study of issues related to supplies of Gazprom's natural gas to CNPC, and will agree on timing, volumes, transfer points, price formula and other conditions to begin the Russian natural gas supplies to the PRC in the shortest time possible.

The Agreement also stipulates cooperation in exploration, development, production, transportation and sales of natural gas and oil; developing China's gas transmission and gas distribution systems, building and operating underground gas storage facilities, and other joint projects, including those located in third countries.

The parties will establish a Joint Coordination Committee for a successful implementation of the Agreement. Gazprom's Representative office in China is responsible for organizing the ongoing joint cooperation with CNPC.

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Currently China's energy industry is based on coal. Natural gas' share in the energy balance of the country is around 2%, but gas consumption and imports are expected to rise in the coming years. In 2003 China's production of natural gas was approximately 35 billion cubic meters.

Chinese National Petroleum Corporation (CNPC) is the largest state owned oil and gas corporation in China (the state owns 100% of the company). CNPC is one of the leading integrated oil and gas corporations in the world.

CNPC was incorporated in 1998 with the Ministry of oil industry of PRC serving as the basis. Today it comprises of companies doing business in exploration, development, production, transportation, storage of oil and gas, as well as in oil refining and petroleum industry, science research. CNPC is the largest producer and supplier of oil and is leading in oil and gas production, refining and sales in China. CNPC (including its subsidiaries) supplies 79% of oil domestically, controls about 95% of the natural gas market and 40% of oil refining products in the PRC, and is involved in 27 overseas projects.

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