China National Petroleum and Russia’s state-run natural gas monopoly Gazprom have signed a framework deal for the supply of natural gas to power-hungry China.

The agreement entails a yearly supply of 2.4 trillion cubic feet (70 billion cubic metres) of gas.

A price has not been finalised, however, and no contract signed, Gazprom’s chief executive Alexei Miller said.

The deal is mutually beneficial to a cash-strapped Russia and a power-hungry nation such as China, which needs to diversify its power sources to continue to grow.

A decrease in European demand has also forced Russia to diversify markets for its oil and gas.

Miller said that the gas contract would include a price formula based on Gazprom’s experience in gas exports and principles of international trade. This indicates Gazprom’s push for the same steep price that it charges its European customers.

Miller said that Gazprom did not need the Chinese investment to develop prospective oil pipelines but that it may use the income to build its processing units.

“Gazprom will independently build gas transportation facilities on the Russian territory,” Miller said.