Price Central Issue in Russia-China Talks on Western Route Gas Pipeline

SOCHI (Sputnik) — Earlier on Friday, Russian Energy Minister Alexander Novak said that Russia's energy giant Gazprom and China National Petroleum Corporation (CNPC) had held talks on the so-called western route of gas supply to China.

"Regarding the gas, work is ongoing…Yes, the price issue," Yanovsky told reporters when replying to a question on whether the talks have entered their final stage and about the central issue of the negotiations.

Talks on gas pricing with the CNPC have been complicated by the corporation's insistence on the possibility of switching to liquefied natural gas, which Gazprom has recently lost its monopoly over, according to previous statements by company representatives. In April, Gazprom Board of Directors Chairman Viktor Zubkov said that the talks will continue until the end of 2016.

In 2015, Gazprom and the CNPC signed an agreement on constructing the western route pipeline, known as the Power of Siberia-2. The Power of Siberia-2 is planned to supplement the eastern route Power of Siberia pipeline and has a planned annual capacity of 30 billion cubic meters, with possible second and third legs bringing annual capacity up to 100 billion cubic meters.

In 2014, Gazprom signed a 30-year agreement with the CNPC for annual deliveries of 38 billion cubic meters of Russian gas through Power of Siberia. The project is scheduled to begin supplying gas sometime between May 2019 and May 2021, starting from 5 billion cubic meters per year and rising gradually.