CNPC and Gazprom have agreed a gas pricing deal that should unlock a major pipeline plan, but it may come at a higher cost than Beijing wanted, the Xinhua agency cited a Russian executive as saying on Saturday.
Alexander Medvedev, Gazprom's deputy chairman, said the two sides had reached consensus on the pricing mechanism for fuel piped from Russia to China after months of wrangling that had held up the start of work. However he added that negotiations "would not be influenced by China's low natural gas import prices", Xinhua said, without giving further details.
Beijing holds state-set gas prices below international market levels, while Gazprom had demanded the gas export price for China should be at least comparable with supplies to Europe, after taking transportation costs into account.
Russian media have reported that China was refusing to pay more than $100 per 1,000 cubic metres, similar to current Russian domestic prices and far below the European price of around $250 per 1,000 cubic metres. Gazprom, which has a monopoly on export of the fuel, was waiting for a deal to be reached to start construction.
But eventually, under a deal signed last year, two pipelines either side of Mongolia could deliver up to 80 billion cubic metres of gas a year - almost double the amount the company sells to Germany, its top customer in Europe.
Moscow has agreed in principle to begin pumping gas to China through the west link in 2011 and by the east link in 2016, the country's top energy official said this summer.
The first pipeline would be fed with output from western Siberian fields, Gazprom said last year. Gas for a second pipeline could come from Sakhalin and maybe the Kovykta field in East Siberia. China has hedged against the slow-going Russian deal and upped pressure on Moscow by aggressively pushing for imports from Turkmenistan and Myanmar.
CNPC, parent of listed PetroChina has agreed to import an annual 30 billion cubic metres (bcm) of gas, or 60 percent of the country's total consumption last year, from Turkmenistan with the first gas flow targeted for as early as 2009.
Turkmen media reported in August that construction had begun on a 7,000 km (4,350 miles) pipeline to take the fuel to China by 2009, bypassing its traditional export market of Russia.
In China, the gas will be fed through a pipeline linking the sparsely populated west with booming coastal regions, which can more easily afford to replace dirty-burning coal. Beijing wants to more than triple the use of the cleaner fuel, which now provides barely 3 percent of China's energy, to 200 bcm a year by 2020.