China´s huge shale gas reserves unwelcome news for Gazprom

China has huge reserves of shale gas, according to a new survey:

China has 25.08 trillion cubic meters of explorable shale gas reserves (excluding Qinghai and Tibet), Yu Haifeng, deputy director of the ministry's geological exploration department, said at a briefing, citing the ministry's latest survey.
Shale gas resources are widely dispersed over the country. The Sichuan Basin, the Ordos Basin, the Tarim Basin, the western Hubei-Eastern Chongqing area, and the provinces of Guizhou and Hunan boast huge stores of the substance, the survey showed.
"China is facing tight gas supply on booming demand. If the country's shale gas output exceeds 100 billion cubic meters by 2020, the fuel will become an important source of China's energy supply," Yu said.

The news about China´s enormous shale gas reserves must be causing panic in the Gazprom boardroom - and in the office of the next Russian president, Vladimir Putin. The Russian energy giant´s plans to sharply increase exports to China will come to nothing, unless Gazprom agrees to much lower prices.

Even before the positive shale gas news from China, the negotiations with the Chinese have remained stalled:

Moscow's plans to export gas to China apparently remain stalled. On February 1, Gazprom said it was expecting new price offers from its Chinese partners. Therefore, the bilateral negotiations have been inconclusive.

Gazprom's project to build the Altai gas pipeline to China was delayed for several years as both sides struggled to agree on gas prices. Six years ago, Moscow first promised to export Russian gas to China via a 6,700 km Altai pipeline. In March 2006, Gazprom and CNPC [China National Petroleum Corporation] signed a memorandum on the delivery of Russian natural gas to China from 2011. Gazprom first offered to supply gas at European prices, while CNPC insisted on lower prices.

Last October, Putin said bilateral talks on the terms of Russian gas supplies to China "were nearing completion". Russian officials had previously expected a final agreement on gas prices to be concluded in June 2009, and gas supplies to start in 2014-2015.