"We should finalise commercial contracts in the middle of next year," Medvedev told Reuters Insider TV in an interview.

That will enable Gazprom to deliver gas from "2015 to the western corridor" of China, he said.

China is seeking to fuel its economic growth - estimated in a Reuters poll at 9.7% this year after 8.7% in 2009 - with energy sources that emit little carbon dioxide such as nuclear power and gas and wants more reliable power supplies.

More and more countries are vying for natural gas from central Asia and Russia, whose main export markets have traditionally been Europe. In December Turkmenistan opened a new pipeline to China.

But Gazprom, which holds the world's largest gas reserves, has enough supplies for both China and Europe and both regions should pay market prices for the fuel, Medvedev said.

"We don't see any reason why China will not be in a position to pay a reference price," he said, specifying that he was referring to "market prices".

Gazprom is betting on reviving demand for the fuel and is promising improved earnings and demand after profits in the first half plummeted 50% as demand slumped due to the financial crisis.

"We anticipate that profit and cashflow in the second half will be substantially better than in the first half," Medvedev said.

Gas emits less carbon dioxide than coal when burned for power

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