Russian natural gas contract looks likely: Experts

Pricing remains an issue, but negotiations expected to be completed soon

Russia and China are highly likely to nail down a natural gas deal during Russian President Vladimir Putin's visit to Beijing in May after years of negotiations, experts from both sides said on Tuesday.

Sergey Pikin, director of Russia's Energy Development Fund, was optimistic about the deal, saying during a video interview that it's "100 percent" possible that a bilateral agreement will be signed next month. However, Alexy Belogoriev, deputy director-general of the Institute of Energy Strategy in Russia, put the possibility at 50 percent. He said that even if the deal doesn't happen during Putin's visit, it might be finished by this autumn.

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Putin has urged Russian companies to expand their exposure to Asia. Since Russia's actions in Ukraine have strained relations with the West, the country needs to be less dependent on energy sales to Europe, he has said.

Russia exports about 160 billion cubic meters of natural gas to Europe annually.

Domestic and international conditions are ripe for completion of the deal, said Sun Yongxiang, a researcher with the Development and Research Institute of the State Council, which is the nation's cabinet.

Pricing has been the core area of disagreement during the negotiations. Sun said the final price may be around $400 per 1,000 cubic meters.

Russia's top natural gas producer, Gazprom OAO, plans to start supplying China with 38 bcm of gas annually starting from 2018. Russia has indicated it's willing to increase the supply to 68 bcm, using both the western and eastern pipelines.

Sun said that any advance payment required won't be a problem as long as the two can reach an agreement. "Russia can use the money on infrastructure construction related to gas supply," he said.

Xia Yishan, senior research fellow at the China Institute of International Studies, said China is working on diversifying its energy supply structure and Russia will play an important role in this effort.

"The government plans to solve the smog problem in 10 years, which will mean a huge increase in natural gas imports," said Xia.

"If Russia has the ability, it is possible that China's natural gas imports from Russia will account for two-thirds of Russia's total gas exports in future," he said.

Evgeniy Konygin, chairman of energy policy and utilization with the Russian Federation League of Industrialists and Entrepreneurs, said the two can also cooperate on new energy projects, an area where China has many technological advantages.