Russia, China draft agreement on construction, operation of gas pipeline across Ussuri River

MOSCOW. Jan 31 (Interfax) - Russia and China have drafted an intergovernmental agreement on gas supplies along the Far Eastern route.

The text of the document was published as part of a corresponding government order dated January 28 posted on the official website for legal information.

The main point of the agreement is to regulate issues concerning the construction and operation of the cross-border section of the gas pipeline, an underwater crossing across the Ussuri River (Wusuli) near the towns of Dalnerechensk, Russia and Hulin, China.

Gazprom (MOEX: GAZP) and China National Petroleum Corporation (CNPC) signed a long-term purchase-sale contract in 2022 for natural gas supplies along the Far Eastern route that will make it possible to increase the Russian company's gas exports to China by 10 billion cubic meters per year. Under the new contract it is expected that the gas will not just go to the markets of Beijing and Shanghai, but will also be actively used along the path of the pipeline in northeastern parts of China.

The document stresses the priority role of the ruble and yuan in settlements. "The parties welcome and encourage authorized organizations' use of the national currencies of Russia and China in carrying out settlements in the energy sector. The financial agencies of the parties will jointly create conditions for promoting authorized organizations' use of national currencies in carrying out settlements in the energy sector," it said.

The cross-border section of the pipeline begins at the gas metering station on the Russian bank and ends at the starting station in Hulin, and does not include the metering station or starting station. The agreement stipulates that a representative of CNPC must be present at the metering station in Russia and that Russia will fast-track the processing of permit documents for their stay.

Gazprom has been appointed as the sole organization to supply natural gas through the cross-border section of pipeline, as well as design, build and operate the cross-border section of pipeline on Russian territory. CNPC, in turn, will be the sole organization to receive gas through the cross-border section of pipeline, while China National Pipeline Corporation will be responsible for the design, construction and operation of the cross-border section of pipeline on Chinese territory.

The cross-border section of pipeline, including the national parts of the underwater crossing, will be owned by Gazprom (or its wholly owned subsidiary) and China National Pipeline Corporation (or its affiliate). The demarcation point of the underwater sections will be determined on the day construction of the cross-border section of pipeline is finished and will remain unchanged for the duration of the agreement.

The fulfilment of the agreement will be coordinated by Russia's Energy Ministry and China's National Energy Administration.

Vp ak

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