The highest record price for liquefied natural gas leads to the possibility that the Russia would stop serving to Chinese consumers by pipeline even though the talks between the countries not stopping over the 10 years.

 

Resulting from the shutdown of Japan’s nuclear reactor, the LNG prices in Asia is keeping upward all the time. They reached the record high in the last week in seven month. Compared to the price in European, they were 42% higher. The officials and Russian Prime Minister had visited China to negotiate a price with China in the end of this year. Talks had not stopped since 2002.

 

China will seek double gas supply to be an alternative of the dirty coal-burning power plants by 2018 from forecasts. Gazprom expects to seek larger market since its supply in European keeping 25% unchanged. 

Following the OAO signing a contract with China to be its largest consumers, the Gazprom is under great pressure to find a deal.

 

China insisted to pay European price, while the Gazprom remain the higher Asian LNG prices. And they may possibly adopt the compromised price. It is urgent for the supplies since it is necessary for Beijing to clean its air.

 

The prices of LNG in northeast Asia were $16.80 per million British thermal units which is $5 higher than in European. The Price in Asia broke historic record is in February with $19.40.But the price in European will be $10 per million Btu in average.

 

The LNG price will reach to $20 per million British thermal units in coming months according to the estimation, while some forecast the price to be a little lower.

 

The talk and the economic proposal are the key point to decide whether the deal can be made. China would be Russia’s largest consumer if the negotiation successes.

 

Many people urged the Russia to regulate the gas price in Asia. But it was difficult for Russia to make a compromise. China would not to make concessions to better develop the two companies’ relationship.

 

China hopes to the unconventional gas can account half of the whole domestic supply by 2010 while it can loss the aim to develop shale gas resoures.

 

It is urgent for Gazprom to get a deal and the domestic supply had some difference from the plan. The deal with China can not be that important but it has some influence.

 

Gazprom plans to develop fields in eastern Siberia to meet the Chinese energy needs by building a pipeline to the Chinese border. The company also made other plans such as expanding its LNG export terminal and started a new LNG project. If reaching an agreement this year, the company would deliver 38 billion cubic meters to China from 2018.

 

Asia countries would get LNG from its competition rival if the company did not award the contract. Gazprom rise 9.1% share this year.

 

To 2038, China will get large amounts LNG supply from a wide range of suppliers such as Qatar Liquefied Gas Co., Exxon Mobil Corp.’s venture in Papua

 

Gazprom’s Miller arrived in Beijing for the talks. While a spokesman Sergei Kupriyanov did not disclose any detailed information.  Li Runsheng, spokesman for CNPC also didn’t answer calls to his office.

 

As part of the gas-supply talks, Petrochina was trying to find more opportunities to involve in the Russia gas field. But it did not get much response from the Gazprom.

 

China had been investing and holding shares in Russia. CNPC would get 49% shares of Rosneft whose east Siberian Taas Yuriyakh venture can produce 120,000 barrels of oil a day.

 

China was moving fast in the gas market in the world. Through forecast, China will import 122 billion cubic meters by 2018 while importing 43 billion last year.

 

There are high chances that the Gazprom would make a compromise to lower the LNG price. The deal can be reached in the late 2013. But the exception may be in the early half of next year.