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China-Russia gas contract not loss-making: Putin
http://www.chemnet.com Dec 19,2014 Platts
"The contract with China is not loss-making," he said when answering a question about a contract to supply up to 38 billion cubic meters/year to China over 30 years that was signed in May after years of price talks.
"Both the Chinese party and we have agreed to grant [tax] benefits. [As a result], the project has definitely become profitable," Putin said speaking during an annual media briefing broadcast on TV.
Putin reiterated that the price formula for the gas supplies was similar to that which Russia uses for supplies to western countries, adding the construction of a pipeline for the project would also help bring gas to settlements in eastern regions currently lack access to pipeline gas.
The contract, worth an estimated $400 billion, is between Russia's Gazprom and China National Petroleum Corp, with gas deliveries from East Siberia, via the Power of Siberia pipeline, set to start in 2019.
The pipeline's construction was estimated at $55 billion, sparking concern the project would be loss-making for Russia, especially after the government granted big tax breaks to the project.
In November, the two also signed a framework agreement to supply up to 30 Bcm/year of gas from West Siberia, via the Altai pipeline.
Gazprom officials said at the time gas deliveries via this route could start earlier than via the eastern route.
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