Russia's Finance Ministry and gas giant Gazprom are in consultations with the Chinese authorities on using some Chinese debt to Russia to finance a gas pipeline, Gazprom said on Monday.
``Chinese debt to Russia, including for armaments' supplies, could be used to finance the project,'' Bogdan Budzulyak, a Gazprom management committee member, told reporters.
He declined to name the sum which could be used to finance the construction of a 4,200-km (2,600-mile) pipeline to link the western Chinese Xinjiang region to Shanghai in the east with a capacity of 20 billion cubic metres of natural gas per year.
Gazprom is one of the companies leading the consortia shortlisted to build the pipeline which would cost around $10 billion. The other contenders are Royal Dutch Shell
A Gazprom source said earlier this month Gazprom and Shell would join efforts to win the contract, but Shell later said no agreement had yet been reached.
Budzulyak said the agreement would be signed shortly.
``We have had negotiations with Shell and we are both satisfied with the conditions. We have just postponed the signing for the time being,'' he said.
Budzuliak said Gazprom was simultaneously holding talks with the Chinese oil giant PetroChina Co Ltd on the joint extraction of gas in Russia in order to provide external resources for the pipeline.
``We have been told that China would have enough resources to keep the pipeline working until 2010 after which it would be necessary to start thinking where to find gas supplies in Russia,'' he said.
Budzulyak said various sources were under consideration, including deposits developed by Gazprom in the Siberian Tomsk region and the giant Kovykta field, also in Siberia, developed by a BP led consortium.
Other options were gas deposits in Sakhalin and in the Yakutia region, both in Russia's Far East, he said.
Budzulyak said Gazprom planned to set up a joint venture in Yakutia to develop local gas deposits
Neftegaz.ru
