Beijing’s state-owned China National Petroleum Corporation (CNPC) and Russian energy giant Gazprom signed an agreement to start switching to payments in rubles and yuan when it comes to the gas that is being transported to China through the Power of Siberia pipeline, Gazprom said on its Telegram channel on Tuesday (Sept. 6).
The decision was referred to as a ”mutually beneficial, timely, reliable and practical solution” Gazprom CEO Alexey Miller stated. “It will simplify the calculations, become an excellent example for other companies and give an additional impetus for the development of our economies,” he said.
The move comes as Russia steps up efforts to move trade out of US dollar, euro and other hard currencies it considers “unfriendly” amid US and European sanctions.
Gazprom did not provide further details on the scheme. Payment will be made 50% in rubles and 50% in yuan, effective immediately, Bloomberg reported citing a person familiar with the plans who spoke on condition of anonymity to discuss matters that aren’t yet public.
The two energy companies have also discussed the Power of Siberia –2 gas pipeline in Russia and the
Soyuz Vostok link across Mongolia, which will both transport gas to China. The first one is expected to be finished in 2030 and its construction will start in 2024. The second one will start operating in 2027-2028.
Last year, Gazprom transported 10.4 billion cubic meters of natural gas to China via the 3,000-kilometer
Power of Siberia pipeline, which has an annual gas capacity of 38 billion cubic meters.
Gazprom aims to increase its supplies to Asian markets, particularly China, as natural gas exports to Europe have dropped sharply due to sanctions.
On Monday (Sept. 5) the Kremlin said that Russian gas supplies to Europe will not resume until Western sanctions against Moscow are lifted.
With reporting by Reuters, Bloomberg