Gazprom strikes preliminary gas deal with China

BEIJING (AP) — China and Russia signed a framework agreement Tuesday that could see a steady flow of natural gas to energy-hungry China from its resource-rich neighbor.

It was one of numerous trade and military agreements signed during a state visit by Prime Minister Vladimir Putin as the countries overcome traditional mistrust to push ahead mutual economic interests. Even so, there has been a growing imbalance in their ties, with Russia's economy lagging behind its booming neighbor.

The deal between Russia's state-run natural gas monopoly Gazprom and China National Petroleum Corp. calls for the supply of about 2.4 trillion cubic feet (70 billion cubic meters) of gas a year, but a price had not been set and no contract signed, said Gazprom's chief executive Alexei Miller.

Chinese media reports have said the agreement was expected to be a gas-for-loans deal similar to a $25 billion oil-for-loans deal completed earlier this year.

Russia's cash-strapped energy companies need Chinese funding, while Beijing has welcomed the chance to further diversify sources of energy needed to fuel its fast-growing economy. The global economic crisis and changing market conditions have further spurred cooperation as lower demand from Europe has pushed Russia to diversify markets for its oil and gas.

The gas framework agreement was formally signed in the presence of Putin and Chinese Premier Wen Jiabao.

Putin said Russian-Chinese cooperation was one of the most important elements to ensure global stability.

"Our consolidated view on certain issues, our ability to coordinate our stance on key international developments often help calm the situation and play a stabilizing role," he earlier told a group of Chinese reporters. "A shared stance of Russia and China on certain issues helps restrain some of our more hotheaded colleagues."

Putin didn't name any country, but Russia and China in the past have spoken against the perceived U.S. global domination.

Miller said the gas contract will include a price formula based on Gazprom's experience in gas exports and principles of international trade — a statement reflecting Gazprom's push for the same high price it charges its customers in Europe. China has bargained hard for a much lower price.

The Gazprom chief also said his company doesn't need the Chinese investment to build prospective oil pipelines.