Still No Agreement on Huge China-Russia Gas Deal

W460

China and Russia still disagree over pricing a multi-billion-dollar gas deal despite years of negotiations, a senior Beijing official said Thursday, ahead of a visit by Vladimir Putin when a contract signature had been expected.

The Russian president will visit the commercial hub of Shanghai on Tuesday and Wednesday for a conference focused on Asian security hosted by Chinese President Xi Jinping.

The two countries -- both veto-wielding permanent members of the U.N. Security Council, where they often act together -- have for years sought to reach agreement on the deal for Russia to supply China with natural gas to fuel its economy, the world's second largest.

An agreement would mark a shift away from European markets for Russia, as it faces criticism and sanctions by the West for its moves over Ukraine, including its takeover of the Crimea peninsula.

"We are still exchanging views in Moscow and will try our best to make sure that this contract could be signed and witnessed by the two presidents during President Putin's visit to China," said China's Vice Foreign Minister Cheng Guoping.

The negotiating companies had reached agreement on the "majority" of issues, he told a briefing, but added: "The main difference between them still lingers on the price of natural gas."

The two firms involved are China National Petroleum Corp. (CNPC), the country's largest oil and gas producer, and Russian gas giant Gazprom.

Under an earlier framework agreement, Russia would pump 38 billion cubic metres of gas to China annually from 2018, eventually rising to nearly 70 billion cubic metres.

The bilateral meeting between Xi and Putin threatens to overshadow the Conference on Interaction and Confidence Building Measures in Asia (CICA), a regional security meeting, analysts say.

Shanghai has deployed heavy security ahead of the meeting, starting armed police patrols and searching passengers at the city's two airports for explosives from this week.

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