China and Russia have signed a gargantuan gas supply contract that is worth around US$400 billion.
The deal, between China’s CNPC and Russia’s Gazprom will run for 30 years and supply around 1 trillion cubic meters of gas, according to Itar TASS.
Gazprom states that this agreement will see 38 billion cubic metres of Russian gas supplied annually to China, and contains provisions such as the price formula linking to oil prices, and an important “take or pay” clause.
“Russia and China have signed the biggest contract in the entire history of the USSR and Gazprom – over 1 trillion cubic meters of gas will be supplied during a whole contractual period. Russian gas will be sold at a brand new market with a huge potential,” Gazprom said.
“The contract as a document is completely ready. It is a very serious and extensive document. There is only one question — the so-called p-zero, the starting, base price in the formula, which is already completely negotiated with our Chinese partners. Therefore, a little is left: to put down just one figure. And a 30-year contract for supplies of 38 billion cu. m. Of gas from Eastern Siberia to China will be signed,” Gazprom CEO Alexei Miller said.
However this amount is just over half the originally proposed 68 million cubic metres annually, put forward in 2009.
The arrangement of this pipeline will see around US$55 billion invested in the construction of production and transmission facilities in Russia.
The work will employ around 11 700 people during the first phase of the project, and 3000 during its operation.
Image: Itar Tass