Gazprom starts Turkish Stream offshore gas pipeline construction

Gazprom starts Turkish Stream offshore gas pipeline construction

Verbatim record of interview by Alexey Miller with TV Rossiya 24

Correspondent: Good afternoon, Mr. Miller. China’s CNPC and Gazprom have signed an Agreement today. What are the basic conditions of this Agreement?

Alexey Miller, Gazprom Management Committee Chairman: Today we have made a very important step in signing a contract to supply 30 billion cubic meters of gas a year via the western route. The Agreement inked today is actually a part of the future contract. It includes more than ten legally binding articles. The final version of these articles has been approved.

These articles are of paramount importance and they play the key role for the future contract. They outline annual supplies – 30 billion cubic meters, the term of the contract – 30 years, the timeframe for building up the volume of supplies to reach the annual contractual volumes, the minimum annual contractual volumes and the daily contractual volume. The main quality specifications have been established for gas supply to China. Another very significant article is the point of the Russian-Chinese border crossing by the gas pipeline. In Russia it is the Kanas Pass. The Agreement signed today contains an article which identifies specific coordinates where the gas pipeline will cross the Russian-Chinese border.

Apart from the Heads of Agreement for gas supply to China, apart from these ten articles which will be included into future contracts, a crucial strategic document was also inked today. It is a new Agreement of Strategic Cooperation between Gazprom and CNPC for another five-year period.

Correspondent: For another five years?

Alexey Miller: For another five years. The main priority projects of the bilateral cooperation between the companies have already been defined for these five years. First of all, it concerns Power of Siberia – the eastern route of gas supply to China. Then it is the western route – signing of a contract, construction of a gas pipeline and what is crucially important is that we will negotiate on increasing the volume of gas supplies to China via the western route and building up the relevant capacities.

Another priority area of activities for these five years concerns the possibility of supplying gas to China from the Far East. As for this document, it should also be stressed that it outlines the main areas of cooperation, but actually they are universal for the gas industry. It should be pointed out that it also regards sci-tech cooperation and personnel training.

Correspondent: Is there any idea of when exactly first gas will be supplied via the western route?

Alexey Miller: The document signed today specifies the construction period, it’s a topical issue. The construction period has been specified, therefore…

Correspondent: But what is it?

Alexey Miller: Let us sign the contract first and put this question aside for a while. But it’s an integral part of the future contract. The construction period has been specified and both parties assume obligations accordingly. Consequently, the date of first gas supplies to China via the western route has been defined, as this date will be counted from the day of contract signing and, accordingly, it will depend on the deadlines assumed today with respect to the gas pipeline construction.

Correspondent: Will the gas volumes differ a lot from the originally planned ones?

Alexey Miller: No, they will be just the originally planned volumes, which is 30 billion cubic meters of gas a year. But we understand that basically it is just the first string of the western route. The strategic agreement inked today for the five years to come envisages such an area of the joint activities as building up the volume of supply via the western route and what we mean here is that later on the second and the third strings will be constructed westwards.

Correspondent: Mr. Miller, I have some more questions about your Turkish project. You have just returned from Turkey and you’ve mentioned that Turkish Stream, its first string will be commissioned already next December. Is everything ready for it now?

Alexey Miller: Yesterday we agreed with the Turkish party that the Turkish Stream gas pipeline would be commissioned and, therefore, gas supply via this gas pipeline will start in December 2016. Today a decision has been made in Gazprom on constructing the Turkish Stream offshore gas pipeline. Today preparations and mobilization actions have begun for launching the offshore section construction.

Correspondent: Does it mean that the offshore gas pipeline construction has already begun?

Alexey Miller: Yes, starting from today Gazprom has moved on to the construction stage of the Turkish Stream offshore gas pipeline.

Correspondent: The last question. Has the discount been agreed with Turkish Botas?

Alexey Miller: There is a preliminary agreement which has not been documented yet. Right now our Turkish partners and Gazprom have a common idea of the discount rate. I think that in the near future we will finalize our agreements.