05.04.06 00:30

TURKMEN GAS TO FLOW TO THE EAST
The following is the text of the general agreement on building a gas pipeline from Turkmenistan to China signed in Beijing on 3 April.
THE GENERAL AGREEMENT

between the government of Turkmenistan and the government of the People's Republic of China on the implementation of Turkmenistan-China gas pipeline project and the sale of natural gas from Turkmenistan to the People's Republic of China:

The Government of Turkmenistan and the Government of People's Republic of China (hereafter referred to as the Parties jointly, and the Turkmen Party and the Chinese Party separately),

- proceeding from their traditional ties of friendship and equal and mutually beneficial cooperation,

- with the aim of further strengthening and developing bilateral cooperation in the trade, economic, social and other fields,

- taking into consideration the importance of cooperation in the oil and gas sector as one of priority directions,

- considering their mutual interests in carrying out the supplies of natural gas from Turkmenistan to the People's Republic of China and implementation of the project of Turkmenistan-China gas pipeline,

- recognizing that construction of Turkmenistan-China gas-main pipeline is in the interests of people of both countries and will facilitate the development of economy and increase the living standards of their people,

- wishing to develop further the earlier concluded interdepartmental agreements and other arrangements related to the project of Turkmenistan-China international gas pipeline project,

- recognizing the need for setting out legal and practical conditions for design, construction, ownership and operation of the gas pipeline, as well as for sale and transit of Turkmen gas with the view of accelerating their practical implementation,

have agreed on the following:

Article 1

The Parties will coordinate and carry out separate and joint actions necessary for the rapid implementation of Turkmenistan-China gas pipeline project, taking into consideration the requirements of construction and the market, as well as to transport natural gas produced in Turkmenistan to the People's Republic of China.

Article 2

The Chinese Party will purchase 30 billion cubic meters of natural gas annually from the Turkmen Party at the Turkmenistan border over 30 years, starting from the date the Turkmenistan-China gas pipeline is commissioned in 2009.

The Turkmen Party will supply natural gas along the Turkmenistan-China gas pipeline at the dates and in quantities indicated in the present article.

The Chinese party will determine the order of purchase of natural gas from Turkmenistan.
In order to provide raw material base for Turkmenistan-China gas pipeline, the Parties agreed to jointly carry out exploration and development of all the deposits and fields on the right bank of Amu Darya River on the terms of Production Sharing Agreement.

Should additional volumes of gas be required for the construction of Turkmenistan-China gas pipeline, the Turkmen Party may guarantee gas supplies from other gas deposits.

Article 3

The Parties will conduct talks with the aim of signing the following agreements by the authorized organizations no later than 31 December 2006:

- agreement on the joint exploration and development of gas deposits setting out the general framework of cooperation with the participation of the Chinese organization to provide the bulk of raw materials for Turkmenistan-China gas pipeline;

- agreement on the major principles of construction of Turkmenistan-China gas pipeline, which determines the major principles of implementation of the project of construction of Turkmenistan-China gas pipeline for the elaboration of technical-economic feasibility study of construction of Turkmenistan-China gas pipeline;

- agreement on the sale and purchase of gas, which sets the annual quantities of gas imports as well as legal, financial and other important terms regulating the sale of Turkmen natural gas to the People's Republic of China.

Article 4

The price for natural gas will be set at reasonable levels and on fair basis, proceeding from the comparable international market price. The payment will be made exclusively in US dollars.

Article 5

The Chinese Party will hold consultations with the governments of transit countries with the aim of reaching agreements on mutually beneficial terms of transit of natural gas through their territories.

Article 6

The Parties will set up a joint working group to conduct essential feasibility studies on the joint development of deposits and construction of the gas pipeline and to provide recommendations to the Parties regarding the optimal route for the gas pipeline, as well as to draft necessary intergovernmental agreements and contracts. The joint working group set up within the framework of the present Agreement will hold meetings on regular basis no less than bi-monthly unless otherwise agreed.

Article 7

The Parties may appoint and authorize the corresponding institutions, bodies, or companies to carry out on their behalf the commitments set by the present Agreement. However, this does not exempt the Party from fulfilling commitments set by the Agreement.

Article 8

Each Party will furnish the other Party with the information it has regarding all the matters related to the development of the Turkmenistan-China gas pipeline project if such information is not of confidential nature and its transfer does not contradict national legislation of the Parties providing such information.

The Parties will, in a timely manner, exchange the corresponding legislative acts related to the activities carried out within the framework of the present Agreement including trade, capital investments, taxation, banking, insurance, financial services, transportation and labour relations.

Article 9

The present Agreement does not affect the rights and obligations of the Parties rising from other international Agreements to which they are signatory.

Article 10

Changes or amendments can be introduced to the present Agreement, with the consent of the Parties, which will then be set out by separate protocols, and regarded as integral part of the present Agreement.

Article 11

Coordination and control over implementation of the present Agreement will be exercised by:

- on the part of the Turkmen Party by the Ministry of Oil and Gas Industry and Mineral Resources of Turkmenistan;

- on the part of the Chinese Party by the State Development and Reform Commission of the People's Republic of China.

Exchange of information in the course of implementation of the present Agreement will be carried out by the results of every half a year in the entire period of validity of the present Agreement.

The organizations authorized to conduct talks and draft further agreements under the Article 3 of the present Agreement will be:

- from the Turkmen Party the Ministry of Oil and Gas Industry and Mineral Resources of Turkmenistan;

- from the Chinese Party the China National Petroleum Corporation.

Article 12

Disputes between the Parties regarding interpretation and application of the present Agreement would be resolved by way of negotiations and consultations between the Parties.

Article 13

The present Agreement was signed in the city of Beijing on the 3rd of the month of April 2006 in Turkmen, Chinese and Russian languages with two original copies in each language, one per Party. All the texts have equal legal force.

Article 14

The present Agreement comes into effect upon the completion of domestic procedures by the Parties, in force in their countries and valid during three years.

The validity of the present Agreement is to be extended automatically for the subsequent three-year period if none of the Parties informs the other Party about its intentions to terminate the present Agreement, which should be no less than six months prior to the expiry date of the next period.

Signed:

For the Government of Turkmenistan

S. A. Niyazov

For the Government of People's Republic of China

Hu Jintao

(Text of the general agreement was published by Turkmen newspaper Neytralnyy Turkmenistan on 4 April 2006)