Alexey Miller, Chairman of the Gazprom Management Committee and Zhou Jiping, Chairman of China National Petroleum Corporation (CNPC) signed today in Saint Petersburg an Agreement outlining the major terms and conditions of pipeline gas supply from Russia to China via the eastern route in accordance with the accords reached previously. The document is legally binding.

The signing ceremony took place in the presence of Vladimir Putin, President of the Russian Federation and Xi Jinping, President of the People's Republic of China.

All the major terms and conditions of future Russian natural gas supplies to the Chinese market via the eastern route were agreed on, namely, the export volume and starting date, the take-or-pay level, the period of supply buildup, the level of guaranteed payments, the gas delivery point on the border as well as other basic conditions of gas offtake. The price conditions will not be linked to the Henry Hub index.

Alexey Miller noted: “Both parties stressed the long-term strategic nature of our partnership. I would like to thank our Chinese colleagues for prompt and well-coordinated work in the last few months. The fact that the major terms and conditions were signed during the G20 summit indicates the parties' aspiration to successfully end the negotiations and sign the contract before the end of 2013.”

Background

CNPC is China's largest petroleum company wholly-owned by the state and is one of the world's leading integrated oil and gas production companies.

In October 2009 Gazprom and CNPC inked the Framework Agreement on the major terms and conditions of natural gas supplies from Russia to China. The Agreement stipulates annual exports of up to 68 billion cubic meters of gas to the Chinese market.

In March 2013 Gazprom and CNPC signed the Memorandum of Understanding for cooperation between the two companies in pipeline gas deliveries to China via the eastern route.