Russia gas chief says China deal will impact Europe prices

Russia’s 30-year deal to supply China with natural gas is likely to affect gas prices in Europe, the head of Russia’s state-owned gas company said.

“Literally a day ago, a really historical event took place, an epoch-making event. We, Russia and Gazprom, have discovered the Asian gas market for ourselves,” Alexei Miller, chief executive of Gazprom, said at an event in St. Petersburg, according to Reuters.

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“It can be assumed that the signing of the contract will affect gas prices on the European market,” he said. Miller did not give details of the effects the deal will have, nor whether he expects prices to increase or decrease.

Miller also said the deal is likely to affect liquefied natural gas projects in western Canada, Africa and Australia.

Neither Russia nor China has said the price of the gas in the Wednesday deal, but industry sources told Reuters it is likely between $350 and $380 per 1,000 cubic meters. Europe has paid similar prices for long-term contracts in recent years, Reuters said.

“This is the contract, which will influence the whole gas market,” Reuters quoted Miller as saying.

Fitch Ratings said Thursday that the deal shows a new benchmark for what China is willing to pay in long-term gas contracts.