PetroChina shares rise after completing gas deal with Russia’s Gazprom

By Li Qiaoyi Source:Global Times Published: 2014-1-6 23:33:06

Shanghai-listed PetroChina Co, China's largest oil and gas producer, saw its shares rise by 1.7 percent on Monday, outperforming a 1.80 percent fall in the benchmark Shanghai Composite Index, after news of its parent company's closing a long-planned deal with Russia's state gas company transpired.

China National Petroleum Corporation (CNPC), the parent of PetroChina Co, and Russia's state-controlled energy giant Gazprom "are getting close to a pricing arrangement that would allow the gas to arrive in eastern Chinese markets at about $13 per million British thermal units [mBtu]," Financial Times said in an article published Sunday, citing unidentified sources from both sides.

"That would translate into $10-$11 per mBtu at the Chinese border - a price that suits both Chinese and Russian calculations," said the report.

Gazprom will reportedly send annual shipments of 38 billion cubic meters of gas to China starting from 2018 from a pipeline yet to be built.

CNPC and Gazprom had agreed on the deal's basic terms in September, but failed to reach a compromise on gas price. The two sides had then set the deadline for the end of 2013 for the massive gas deal, Xinhua News Agency reported in September.

Calls to a Beijing-based spokesperson for CNPC for confirmation of the report went unanswered by press time on Monday.

The Sunday report reinforced expectations of an imminent agreement between the two sides, as Moscow-based Interfax news agency had reported on December 17 that the deal might not be reached before the end of January, 2014, citing Gazprom Chief Executive Alexei Miller.

"The price [revealed by the Financial Times report] would be okay for both sides, bringing the gas deal close to success," Lin Boqiang, director of the China Center for Energy Economics Research at Xiamen University, told the Global Times Monday.

Pumping gas from the Russian energy giant at a time when China has been making an anti-smog push demanding greater use of green energy would substantially help ease the country's potential energy needs, Lin commented, while noting the deal would be beneficial to Gazprom as well due to weak demand from European markets.

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