Gazprom in Talks on China Pipeline

BEIJING -- Gazprom is in talks about laying two pipelines to China, which could each send up to 30 billion cubic meters of gas per year across the border, a senior executive said Wednesday.

Alexander Medvedev, head of Gazprom's export arm, said the firm was in talks with Chinese state-owned energy firm CNPC over the new links.

One route would carry gas westwards to join China's internal west-east pipeline and the other would head to the country's northeast region, he told reporters.

"We are in discussions with CNPC over which route will have priority, what the timing on the beginning of deliveries [will be] and which volume of delivery there will be," said Medvedev, in the Chinese capital for a business presentation. "We are discussing figures of between 20 bcm and 30 bcm for each project."

Gazprom, which supplies a quarter of Europe's gas needs, expects gas exports to rise to 149.5 bcm this year, excluding shipments to ex-Soviet republics, earning up to $27 billion. They will expand nearly 4 percent in 2006, to 155 bcm, Medvedev added.

Pipelines within Russian borders would be built by Gazprom, while those in its energy-hungry neighbor would be the responsibility of the Chinese partner, Medvedev said.

However, Gazprom would be interested in investing in Chinese infrastructure if Beijing backed the move, he said.

China imported minimal amounts of natural gas last year, and Beijing has said it was keen to limit its appetite for the foreign energy supplies that meet more than 40 percent of its crude needs.

But a rapidly growing economy and officials' desire to clean skies clouded by smog from coal-fired power stations, mean appetite for the clean-burning fuel is set to soar.

Gazprom will likely focus initially on just one of the possible pipelines, and construction would not go ahead until all the details were sorted out.

"We don't like it when the pipelines are lying empty on the ground," Medvedev said.

Gas fields in eastern Siberia currently have the potential to export around 65 bcm to 75 bcm at a conservative estimate to Asia-Pacific markets, he said.

Russia does not have any oil or gas pipelines to China.

It is expected to start building an oil pipeline to the Pacific in December, and builder Transneft wants to eventually set up a 600,000 barrel-per-day "spur" line heading to China.