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Russia's Gazprom is continuing its efforts to push for increased gas demand stimulation in China as part of its plans for supplying the country with gas via pipeline after 2018.

The prospects for Chinese gas demand growth are not as strong as they were a few years ago, which has dampened Beijing's appetite for increasing its options for Russian gas imports.

Now Gazprom is pushing to help create more demand, signing last month a new MoU agreement with China's state-owned CNPC on building gas-fired power stations in China.

Article Continues below...

And at the end of last week at a meeting in St Petersburg, the two sides approved the steps needed to implement the deal, which also includes cooperation on gas storage inside China.

"In the course of the meeting, the parties approved the road maps for implementing the MoU on underground gas storage and gas-fired power generation in China," Gazprom said.

Gazprom also said it wants to help boost the use of gas as a fuel in vehicles in China.

China is already a strong advocate of using gas in its public transportation fleet, and is hoping to boost domestic gas production through incentives for development of, for example, coalbed methane.

POWER OF SIBERIA

At the St Petersburg meeting, Gazprom and CNPC also talked over progress on the construction of the Power of Siberia pipeline to bring Russian gas to China.

The two companies signed in May 2014 a 30-year contract to supply 38 Bcm/year of Russian gas to China via the pipeline.

"The construction of the Power of Siberia gas pipeline is running strictly on schedule," Gazprom said following last week's meeting with CNPC.

While work on the Power of Siberia line continues to plan, there have been some hiccups in recent months around Gazprom's dealings with CNPC.

In May this year, Vitaly Markelov, deputy chairman of the Gazprom management committee, pointed to a continuing spat with CNPC over gas prices that could affect any talks on future gas supplies.

"The negotiating process with CNPC has been affected by the liberalization of Russian LNG exports, as our Chinese partners referred to the option of receiving Russian gas as LNG in order to put pressure on Gazprom in terms of pricing," Markelov said at the time.

"This has had a negative effect on the Russian-Chinese negotiations regarding other projects for Russian gas supply."

The Power of Siberia gas line will be the main thoroughfare for gas exports to China, but the two sides also planned for a pipeline to link Russia and China via a western route.

Some 30 Bcm/year would flow through that route.

--Stuart Elliott, stuart.elliott@spglobal.com
--Edited by Jeremy Lovell, jeremy.lovell@spglobal.com