Russia readies for construction of gas pipeline to China

Construction on a natural gas pipeline meant to feed the Chinese market is set for the beginning of September, a Russia official said Tuesday.

A pipeline contract between Gazprom and China National Petroleum Corp. is for 30 years and calls for 1.3 trillion cubic feet of natural gas per year. Russian energy company Gazprom said it started working on the infrastructure necessary for the pipeline almost immediately after signing a contract for gas to China in May.

A Russian source told state news agency RIA Novosti construction on the pipeline should begin next month.

"Sept. 1 is a tentative date, and it will all depend on the schedules of the country's leaders," the source said Tuesday.

Gazprom has been looking to expand into the growing Asian market in an effort to diversify an asset base tied to a European economy still struggling to grow. Ongoing disputes over gas debt in Ukraine, which transports the bulk of Russian gas supplies to Europe, adds another layer of risk to Gazprom's consumer foundation.

First deliveries from the Power of Siberia pipeline through a contract valued at $400 billion could start as early as 2018.