Russia, China agree to use rouble, yuan for gas payments

State energy giants Gazprom and China National Petroleum Corporation (CNPC) signed several agreements on Tuesday, including on the use Russian roubles and Chinese yuan to pay for Russian natural gas supplies to China, Gazprom said.

The agreements were in addition to a February deal between them to increase gas supplies from 2023 via the eastern route of a China-Russia pipeline, bolstering an energy alliance at a time of strained ties between Russia and the West over Ukraine and other issues.

Gazprom CEO Alexei Miller said in a statement posted on its website that allowing for payments in Russian roubles and Chinese yuan was “mutually beneficial” for Gazprom and China’s state-owned CNPC.

Russian President Vladimir Putin said on Wednesday that China would pay Gazprom for its gas based on a 50-50 split between the rouble and yuan. read more

Gazprom, which has a monopoly on Russian gas exports by pipeline, said the linear part of the gas pipeline from the Kovyktinskoye field in the Irkutsk region to the Chayandinskoye field in Yakutia was nearly completed. Gas from the Kovykta field was expected to flow to Power of Siberia before the end of 2022, the company said.

“The fulfilment of Gazprom’s contractual obligations to increase the volume of gas supplies to China in 2023 will be ensured,” the company said.

In February, China and Russia has signed a 30-year contract for the supply of 10 bcm of gas a year.

Gazprom said the main technical parameters of deliveries had been fixed and it had started designing the gas pipeline.

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Russia already sends gas to China via its Power of Siberia pipeline, which began pumping supplies in 2019, and by shipping liquefied natural gas (LNG). It exported 16.5 billion cubic metres (bcm) of gas to China in 2021.

Under plans previously drawn up, Russia will increase the annual gas transmission via the pipeline to China to 38 bcm by 2025 from 5 bcm in the first year.

CNPC, the parent of PetroChina, said on Wednesday it had signed an agreement with Gazprom related to the Power of Siberia gas pipeline, but did not provide further details.

China’s foreign and commerce ministries were not immediately available for comment.

Gazprom and CNPC executives met via a video conference held during the Eastern Economic Forum 2022.