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Gas contract between Russia and China will lead to lower prices in the Asian region

The 400 billion-dollar gas contract between China and Russia could lower gas prices across the entire Asian region, Reuters reported.

"This will certainly put pressure on the price of gas, and some see this as the beginning of the end for margins for Asia," Japan Oil, Gas and Metals National Corp (JOGMEC) analyst Masumi Kimura said in a report.

According to sources, the price for China is about $ 10-10,50 per million British thermal units, compared with $ 13 on the spot market in Asia. Japan accounts for one-third of the world's purchases of liquefied natural gas ($ 70 billion in 2013), so this trend is driving interest in Japan to build a gas pipeline from Russia.

According to the manager of the Japan Petroleum Development Association, Takashi Hayasaki, the gas pipeline from Russia to China "stimulates the development of gas fields in Siberia, which can become a source of LNG for Japan." Last year, Japan increased its LNG purchases from Russia by 3,1 percent to 8,57 million tons, or 9,8 percent of all imports.

A group of 33 members of the Japanese parliament is planning to come up with a proposal to build a gas pipeline from the Russian Federation to Japan, which could cost $ 6 billions.

But according to JOGMEC economist Daisuke Harady, Gazprom and Rosneft are more interested in LNG supplies than pipeline gas. Gazprom plans to build a liquefaction plant with a capacity of 2018-10 million tons per year in Vladivostok by 15, and Rosneft and ExxonMobil are planning to build such a plant on Sakhalin with a capacity of 5 million tons per year. 

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