Russia’s top gas producer Gazprom has signed a long-awaited export contract with China as it seeks to diversify its markets away from Europe.
That sets up the completion of a deal by the end of the year for it to supply gas to the world’s second largest economy.
Gazprom has been trying to get into the Chinese market since 2006, but the two sides have not been able to agree on terms, particularly price.
Meanwhile some of its Russian rivals have already reached agreements to supply China from yet-to-build liquefied gas plants and have been lobbying for limits to be placed on Gazprom’s export monopoly.
It is also facing challenges from Turkmenistan, which just agreed to triple its gas exports to China by 2020.
Russia started supplying gas to Western Europe in 1968 and the European Union has remained Gazprom’s key market, where the company generates 55 percent of its profit by covering a quarter of the region’s gas needs.
But cash-strapped European firms are increasingly seeking to wean off their energy dependence on Russia, looking for cheaper fuel, such as liquefied natural gas.
On Thursday the contract was signed by heads of Gazprom and CNPC in the presence of presidents Vladimir Putin and Xi Jinping on the sidelines of the G20 Summit.
The basic terms of that contract “define the volumes, start of deliveries, payments, ‘take-or-pay’ amendment” and other issues, Gazprom said in a statement. It gave no further details.