China and Russia are negotiating the price of the gas, and the result of negotiations will likely be seen in three to four months, said TNK-BP president and chief executive officer, Robert Dudley. He also said that he is confident that natural gas from Kovykta will start flowing through the pipeline by the end of 2008, as planned.
TNK-BP is the major shareholder of Russia Petroleum, the project’s gas supplier. Other major partners in the deal include China National Petroleum Corp (CNPC), China’s largest oil company, and South Korea’s Kogas. The project involves construction of a major a cross-border pipeline to carry 20bn cum/yr of gas from the Kovykta field in Russia’s Irkutsk Province to China’s NE provinces, and thence to Beijing and the nearby Bohai Rim via domestic branches. An additional 10bn cum/yr of gas will be delivered to South Korea through a subsea pipeline from the port city of Dalian.
CNPC, Kogas, and Russia Petroleum finished the feasibility study for the Kovykta gas pipeline in November, and signed a preliminary letter of intent for the sale and purchase of the gas. The study has been submitted to the governments of Russia, China, and South Korea for review and approval.
Robert Dudley is reported to have said that Russian and Chinese government officials are supportive of the project, although the delay in final government approval for the project was due to recent elections in Russia. He also confirmed that the Kovykta project is separate from the oil pipeline project, currently stalled due to indecision on whether to build the pipeline to either Daqing or to the far eastern sea port of Nakhodka in China.