UPDATE 2-Russia says finalising contentious China gas deal

* Medvedev says gas deal documents being finalised

* China, Russia arguing over pricing of gas

* Hu says both sides want to boost energy cooperation

* Hu to visit Gazprom later in day with Putin

(Recasts, updates with Hu, Medvedev quotes, IEA comment, previous BEIJING)

By Alexei Anishchuk and Ben Blanchard

MOSCOW, June 16 (Reuters) - China and Russia are finalising documents to put an end to a fractious dispute over a crucial gas deal, Russian President Dmitry Medvedev said on Thursday after meeting his Chinese counterpart Hu Jintao.

Hu has made securing energy for the world's second-biggest economy a diplomatic priority, but relations with Russia in this key area have not been smooth.

The two sides have been bogged down in disagreements on pricing for the gas that Russian energy giant would pump to China via two routes.

"At the moment, documents on gas supplies to China are being finalised," Medvedev told reporters in the Kremlin. "This is a strategic document, meant for the decades ahead."

Hu made no direct mention of the spat, but said Russia and China viewed energy as a "key area" for cooperation.

"Both sides are willing to keep pushing forward this cooperation on a mutually beneficial, win-win basis," Hu said.

"I believe that with the joint hard work of both sides, Sino-Russia relations will get better and better, which will benefit both peoples," he added.

Russian Deputy Prime Minister and energy tsar Igor Sechin, speaking just after Hu and Medvedev's briefing, said that the talks had "advanced considerably."

Hu, in Russia for a state visit, will meet Prime Minister Vladimir Putin later in the day at the headquarters of Russia's state controlled gas export monopoly Gazprom (GAZP.MM).

BIG TROPHY

In a measure of pessimism about the prospects for a deal, Russian pipeline deliveries of gas to China have not been included in the International Energy Agency's five-year view of the gas market, its head of gas, coal and power markets said. [ID:nLDE75F0ME]

Negotiators for China National Petroleum Corp (CNPC) have signalled they will pay no more than $250 per thousand cubic metres, sources at Gazprom said on Wednesday. [ID:nLDE75E24N]

Russia's gas export monopoly is still targeting a price that will make deliveries to China as profitable as those to their European clients.

An agreement on the gas project would be a big trophy for Hu, who has courted Russia as a way of increasing energy security as heady economic growth increasingly forces China to look abroad for oil and gas.

Under early terms hammered out over five years by Russian and Chinese negotiators, Russia will deliver 30 bcm per year from fields on the Arctic Yamal peninsula, the same fields which supply Europe, via pipeline through the Altai region to northern China.

China would also like to contract an additional 38 bcm from yet untapped fields in East Siberia.

In recent talks in Moscow, Chinese negotiators won Russian consent for an eastern pipeline route from those fields in addition to the Altai route long favoured by Gazprom.

As talks have dragged on between Russia and China, however, China has increased its purchases of gas from Russia's rivals in Central Asia, the former Soviet Union states of Uzbekistan and Turkmenistan. (Additional reporting by Vladimir Soldatkin and Michael Martina in Moscow and Sabrina Mao in Beijing; editing by James Jukwey)