OREANDA-NEWS. July 25, 2011. Disagreement over price continues to hold up a landmark agreement between Russia and China that would pave the way for the supply of up to 68bn cubic metres of Siberian gas to the world’s biggest energy consumer, according to Alexander Medvedev, deputy chief executive of Gazprom.

Mr Medvedev said the two sides still remained far apart on price, but added that an eventual agreement was in the interest of both parties.

“It would be good [to have a deal] because we have a roadmap with a target to sign a contract in the middle of the year. But it’s the natural desire of the buyer to buy cheaper and of the seller to sell higher and actually the current level of negotiation left only one unsolved issue and [that] is the price,” he told the Financial Times in London before flying to Beijing late last week.

Russia and China had widely been expected to sign an agreement in June during a state visit to Moscow by Hu Jintao, China’s president. A deal, which would supply China for the next 30 years, is seen as central to Russia’s strategy to globalise its energy trade away from its core European markets where it has also faced competition by a surge of liquefied natural gas (LNG) coming from countries like Qatar.

However, Mr Medvedev said he believed Gazprom’s position on price was “justified” in light of the current global supply and demand situation. Gas demand is also expected to rise as governments around the world re-evaluate their commitment to nuclear power after Japan’s recent disaster. Gazprom would also have to invest heavily in two pipelines that Russia has proposed to build from Siberia to China.

“We believe China needs natural gas imported from Russia in order to keep the level of economic growth and the history of our supply and reliability of our supply is another argument for the Chinese,” he said.

Chinese demand is seen as one of the key drivers behind recent predictions by the International Energy Agency that the world could be entering “a golden age of gas”. The nuclear crisis in Japan has also boosted expectations of demand growth. Mr Medvedev said even before the disaster at the Fukushima plant, there was an argument “to treat natural gas not as a temporary solution but as an important part of the energy mix and the best road to a carbon dioxide-clean environment”.