Deal with China for Altai gas pipeline is 'imminent'

Fears that the iconic Power of Siberia gas project will be delayed have intensified after it emerged Gazprom could sign a deal with China for a rival pipeline within weeks.

The Kremlin has denied any plans to postpone the $55billion line, which would supply gas along a 4,000km route from the Sakha Republic to China's eastern industrial heartland.

When it was announced in May last year, it was seen as a 'diplomatic coup' for Moscow with some 38 billion cubic metres of gas expected to be shipped along the easterly pipeline.

But yesterday international news agency Reuters claimed the plans could be put on the back burner, with focus being shifted to a less ambitious project to send gas from existing fields through a pipeline thousands of kilometres further west in the Altai region.

Now it has emerged energy firm Gazprom expects to sign a contract for this alternative route when Chinese President Xi Jinping visits Russia for the Victory Day celebrations in May.

Russian President Vladimir Putin has today been meeting with Li Zhanshu, the head of the Office of the Central Committee of the Communist Party of China. 

According to Mr Putin’s official spokesman, Dmitry Peskov, the Chinese official will also meet with Sergei Ivanov, the head of the Russian presidential administration, with it likely that the pair will discuss the signing of the gas contract.

Mr Peskov said: 'As a rule, the signing of the contract is not set for any date, but if the terms of the contract are agreed, we cannot rule out signing. If not agreed, then talks will go on.'

If a deal is not signed in May, then there is a second opportunity when President Jinping visits the Russian city of Ufa for the gathering of the Shanghai Cooperation Organisation (SCO) and the BRICS economic summit between July 8 and 10.

Less than five months have passed since Mr Putin and his Chinese counterpart signed a memorandum of understanding and framework agreement on the construction of a gas pipeline in the Altai Mountains.

It was only in May last year that the deal for the Power of Siberia pipeline was signed and Moscow has insisted it will not shelve the project despite a fall in global energy prices. 

Driving that deal was the need to tap into Yamal gas, including the giant Bovanenkovo Yamal field which was opened in 2012 and now pumps around 40 billion cubic metres a year but can produce up to 140 bcm.

The easterly pipeline is due to come on stream in 2019 but according to Reuters on Wednesday the Altai project would see no need for the development of new fields.