Feb. 27 (Bloomberg) -- OAO Gazprom headed for its strongest gain in a week as the world’s biggest natural-gas producer said it plans to sign a supply contract with China by the end of the year after almost a decade of talks.
The shares jumped 1.1 percent to 138 rubles, as of 2:46 p.m. in Moscow, the biggest advance on a closing basis since Feb. 19. Russia’s Micex Index traded up 0.1 percent.
The state-run gas exporter agreed to speed up talks with China National Petroleum Corp. on supplies via the so-called eastern route from Russia’s eastern gas fields to the east of China, the Moscow-based company said today in an e-mailed statement. Gazprom has been negotiating a deal to supply as much as 68 billion cubic meters of gas a year to China, the world’s fastest growing major economy, since the two companies signed a cooperation deal in 2004. The talks repeatedly stalled because of disagreements on prices.
“Any impulse on the China deal will be assessed as positive,” Artem Kvas, an oil and gas analyst at Renaissance Capital, which has a buy recommendation for the stock, said by phone today. “It’s quite positive because there is a worst-case scenario for Gazprom with stregthening European competition and pressure on the domestic market.”
The eastern pipeline, which will supply the industrially- developed eastern territories of China, will support Gazprom’s plans to develop eastern Siberia and Far East, Kvas said.
“Market hopes for an accord will rise and, as always, speculation about the event is at least half as good as the thing itself,” Julian Rimmer, a trader of Russian and Turkish stocks at CF Global Trading in London, said by e-mail.