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CNPC: Natural Gas Will Become a New Growth Point of China-Russia Energy Cooperation

Sina News, Beijing time, Russian satellite network reports, Wang Shengzi, chief representative of the Russian Representative Office of CNPC(69.94, -0.28, -0.40%), told the satellite news agency that China and Russia have achieved fruitful cooperation in oil and gas. In 2018, natural gas will become a new growth point of energy cooperation between China and Russia.

Wang Shengzi said that energy cooperation is an important pillar area of cooperation between China and Russia under the framework of strategic cooperation partners. Oil and natural gas, as the engine of economic development, have always been the barometer of the pragmatic economic relations between China and Russia. The oil and gas cooperation between the two countries is fruitful and steady.

He pointed out that cooperation between China and Russia in the field of crude oil will continue to develop, and Russia will steadily become China's main supplier of crude oil. At the same time, natural gas will become a new growth point for China and Russia's energy cooperation.

Wang Shengzi analyzed that at present, the European market is saturated and the CIS market is shrinking while China's market has absorbed 30% of Russia's oil and gas exports, and the number is growing.

He pointed out that in 2018, Russia's total crude oil exports to China will reach 60 million tons, which will be the first place in China's oil trade with China. Two years later, the Siberia power gas pipeline will be qualified for gas transmission, and the annual supply of gas to China will reach 38 billion cubic meters at that time. It provides important support for China's clean fuel and brings stable financial revenue for the economic development of Russia.

He continued, in addition, the Arctic Yamal liquefied gas project, launched in December 2017, is another important milestone in the strong strategic partnership between China and Russia. After the completion of the project, more than 4 million tons of liquid gas will be exported to the Chinese market every year. The opening of the Arctic channel has increased efficiency and reduced transport distances by thousands of miles.

Wang said there is great potential for cooperation between China and Russia in the field of natural gas.

He said China is at a crucial stage of economic development and transformation of energy structure. Natural gas accounts for a relatively low share of total energy consumption in China, far from the world average consumption, 7% in 2017, and it is expected to reach 10% in 2020 and 13% in 2030. Even so, China still has a gap of 24 percent of the world's average consumption.

He stressed that as the third largest natural gas consumer in the world, China's per capita consumption of natural gas is only 123 cubic meters, far below the global average of 452 cubic meters, less than that of the OECD country of 1265 cubic meters/person.  In the next 10 to 20 years, as the most realistic, economic and large-scale clean energy, China and Russia will have greater cooperation space in the field of natural gas. Oil and gas cooperation will remain the locomotive of China-Russia economic and trade relations.

Russia and CNPC signed a 30 years contract for the purchase and sale of gas from the Russian Central East Line in May 2014.  The two sides agreed that Russia should supply 38 billion cubic meters of natural gas to China through the "Siberian power" pipeline every year. The gas supply should start on December 20, 2019.

The gas field of The Yamal liquefied natural gas project is located in the Yamal Nemetz autonomous region in northern Siberia, Russia. In mid-2013, CNPC was invited by the Russian government and Russia Novatek to enter Yamal project. Currently, Petrochina and China silk road fund are respectively 20 percent and 9.9 percent of Amar LNG companies, with a total investment of US $27 billion.