By Chen Aizhu

SINGAPORE (Reuters – Russia and China have signed a contract for 30 years to supply natural gas to China through a new pipeline. They will also settle new gas sales in euros. This helps to strengthen an energy alliance between Beijing and Moscow, despite Moscow’s strained relations with the West on other issues.

Gazprom, which owns a monopoly in Russian gas exports via pipeline, agreed with China’s state energy major CNPC to deliver 10 billion cubic metres per annum, according to the Russian firm and a Beijing industry official.

In comments made later by Gazprom, a source stated that the first flows through the pipeline would begin in the next two or three years. They will be linking Russia’s Far East and northeast China.

Russia sends gas already to China through its Power of Siberia pipe, which started pumping supplies in 2019 and also by shipping LNG (liquefied natural gas) In 2021, Russia exported 16.5 million cubic meters (bcm), of gas to China.

Power of Siberia does not have a connection to European pipelines. Europe is currently experiencing high gas prices because of limited supplies.

Russia had previously made plans to deliver 38 bcm gas through a pipeline to China by 2025, according plan.

This new agreement, made in conjunction with the visit of Russian President Vladimir Putin at Beijing Winter Olympics, will add 10 billion dollars to Russian pipeline sales to China under long-term agreements.

Gazprom did not provide any details regarding the agreement in its announcement.

According to a Beijing source who did not want to be named, Russian gas will be shipped via pipeline from Sakhalin, Far East, to Heilongjiang, northeast China. Its capacity is approximately 10 billion cubic meters per year.

In line with their efforts to diversify away US dollars, they would settle the agreement in euros.

Un rep for CNPC did not respond immediately.

Talks began years ago between the companies after Power of Siberia was established, which is a pipeline that transports natural gas to China. It runs 4,000km (2500 mile) and has been in operation for several years. According to a source, talks accelerated after Beijing made 2060 its carbon neutral goal.

According to the source, “China’s recent coal shortage served as another reminder that natural gas is of special value. That’s why CNPC decided the deal with the new pipeline”

A representative from CNPC did not respond immediately to a request.

Sources say the price of the new deal for gas will not differ from Power of Siberia. They also said that they were both satisfied with it.