Russian President Vladimir Putin may announce a major deal with China. The two countries have signed a gas contract over 400 billion dollars. The agreement should also be a warning to the West.
Russia took a major step in its shift to China. State corporations of both countries signed an agreement on gas deliveries after years of negotiations. The agreement came shortly before the end of the visit of Russian President Vladimir Putin in Shanghai. Gazprom CEO Alexei Miller told the Interfax news agency, according to Russian, the price was a “trade secret”. Total payments for 30 years amounted to about 400 billion dollars. The agreement was made in the morning at four clock local time.
The Russian state company Gazprom will provide the Chinese partner CNPC of 2018 at least 38 billion cubic meters of gas per year. Gazprom CEO Miller said, according to the agency that his company could get advance payments. Gazprom shares rose after the announcement of the deal on the Moscow Stock Exchange. “That’s a big contract for
Gazprom. Such is a contract it with any other company,” Miller said. The agreement provides for gas deliveries before a new eastern pipeline connecting the two countries.
The price issue was during the more than ten years of negotiations between Russia and China always the sticking point. Yet on Tuesday it was said, both sides could not agree on price.
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For Putin, the agreement is a success. In view of the dispute with the West in Ukraine-Russia crisis fears about its gas business with Europe and tries strengthened to tap new sources of revenue in Asia. Also for the rising economic power of China, the deal is important because the country has a high energy consumption.
A Memorandum of Understanding on gas supplies had reached about a year ago during his first official visit to Moscow, China’s state and party chief Xi Jinping. Afterwards, however, the negotiators could not agree on a price for the supplies.
Observers had assumed that the Ukraine-Russia conflict could bring in the negotiations on far-reaching concessions. For Moscow was because of the threats of the U.S. and the EU urgently looking for new customers for its gas.
Since the outbreak of the Ukraine crisis , the economic relations between Europe and Russia have cooled . Yet on Tuesday , the Russian Prime Minister Dmitry Medvedev had declared that Russian gas could be delivered in the future rather than to Europe to China . Russia has ” sufficient reserves ” to supply both the East and the West with gas.
When will assume ” the worst ” is a reorientation of gas exports from Europe to China ” theory ” quite possible.
That is now an agreement between China and Russia has been made, should also play a message to the West be responsive to the intervention of Moscow in Ukraine with sanctions. Due to outstanding payments of Ukraine for Russian gas Moscow had threatened recently so to turn off the gas tap . This would have consequences for Europe , as Ukraine is a major transit country for Russian gas.
The European Commission warned Gazprom to ensure gas supplies to Western Europe
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