Russia's OAO Gazprom (GAZP.RS) will likely determine a price in June with China for gas supplies, the state gas giant's chairman said Wednesday on Rossiya 24 television, Dow Jones reports.
"I think that somewhere in June the price will finally be determined and by the end of the year all the contracts will be signed in regards to the supply, with the volume and price agreed," Viktor Zubkov said.
Gazprom said Friday it would conclude a 30-year supply deal to China by the end of the year, just as it is struggling with declining demand and regulatory pressure in its core market of Europe. Under the proposed agreement, Russia will begin shipping 38 billion cubic meters of gas a year to China in 2018 and could eventually increase supply to 60 billion cubic meters a year.
For years, China has sought greater access to Russia's vast gas supplies, but the two sides have never agreed on price. But Russia is now looking to Asia for sales, as demand falls and competition rises in Europe. It also wants funding to help develop and ship distant and hard-to-produce energy reserves. The two sides appear to be moving closer on price, as the price that Gazprom receives in Europe, its most lucrative market, has decreased.
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