China National Petroleum Corporation (CNPC), the parent company of China's top oil and natural gas producer PetroChina (PTR.NYSE; 00857.HK; 601857.SH), signed several agreements with Russian state-owned natural gas company Gazprom on Thursday to expand bilateral cooperation. Still, the two companies didn't reach milestone agreement on natural gas supply through the western route.
The two sides would carry out commercial negotiations on the deal in the last two weeks of January 2016, said a release by Gazprom. "The Chinese side confirmed the initial plan to build one natural gas pipeline with annual handling capacity of 20 billion cubic meters," said Gazprom adding the two parties were also considering prospects to build the second natural gas pipeline via the western route.
An action plan was concluded to carry out feasibility study and review potential sales markets regarding natural gas supply from Russia's Far East to China. "The eastern route is steadily progressing and all necessary facilities would be completed within the contract terms," said Gazprom's chairman Alexey Miller.
Gazprom and CNPC signed an agreement on designing and construction of cross-border section of natural gas via the eastern rout. The agreement sets procedure of technical decision making, engineering and construction of the section including the submerged crossing of Amur River, said Gazprom.
Besides, a communication agreement was signed on the cross-border section of Sino-Russian natural gas pipeline via the eastern rout. The communication deal covers key technical requirement to communication system and its maintenance during construction and operation period.
Importantly, the two state-owned players set a joint working group under Joint Coordinating Committee to explore possibility to establish a joint venture on gas storage in China. The two companies have specified multiple underground natural gas storage projects including one for the east route and two for the western route.
CNPC and Gazprom Neft signed a three-year memorandum of understanding (MOU) on joint actions in exploration and production of oil reserves in Russia (including the Arctic Shelf), China and third countries. The two companies also would cooperate on refining and sales of oil and final products. CNPC and Gazprom Neft consider cooperation in procurement of equipment and technologies for exploration, production and processing of hydrocarbon feed stocks as well as joint effort to raise fund for future partnership. Plus, heads of the two companies signed an action plan on gas-fired power generation in China and other areas. A working group would be set up and a number of potential projects have been proposed in northeast and east China, according to Gazprom.
The two companies have set up a joint working group to study possibility for cooperation on natural gas vehicles.
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