Beijing today hosted a working meeting between Alexander Medvedev, Deputy Chairman of the Gazprom Management Committee and Zhou Jiping, Vice President of China National Petroleum Corporation.

The parties continued discussing issues in relation to the implementation of the Protocol on Natural Gas Supply from Russia to the PRC. The parties progressed in agreeing on the terms and arrangements of gas deliveries from Russia to China via the Western and Eastern routes.

The Chinese side confirmed the priority of gas shipments from Russia via a Gazprom authorized company.

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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% 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%-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. The 4th meeting of the Joint Coordinating Committee took place in August 2006 in Russia.

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

Before the 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.