China and Russia signed
a $400-billion gas supply deal on Wednesday, securing the world's top energy
user a major source of cleaner fuel and opening up a new market for Moscow as
it risks losing European customers over the Ukraine crisis.
long-awaited agreement is a political triumph for Russian President Vladimir
Putin, who is courting partners in Asia as those in Europe and the United
States seek to isolate him over Moscow's annexation of Ukraine's Crimea
much depends on the price and other terms of the contract, which has been more
than a decade in the making.
China had the upper
hand as talks entered the home stretch, aware of Putin's face-off with the
sides could take positives from a deal that will directly link Russia's huge
gas fields to Asia's booming market for the first time - via thousands of miles
of new pipeline across Siberia that form part of the package.
the biggest contract in the history of the gas sector of the former USSR,"
said Putin, after the agreement was signed in Shanghai between state-controlled
entities Gazprom and China National Petroleum Corp (CNPC).
Chinese friends are difficult, hard negotiators," he said, noting that
talks went on until 4 a.m.
mutual compromise we managed to reach not only acceptable, but rather
satisfactory, terms on this contract for both sides. Both sides were in the end
pleased by the compromise reached on price and other terms," the president
Chinese counterpart Xi Jinping applauded as they witnessed the deal being
signed before the Russian leader was to leave Shanghai at the end of a two-day
came in time for a major economic summit in St. Petersburg starting Thursday.
About a dozen chief executives and chairmen of major U.S. and European firms
have withdrawn from the forum over the Ukraine crisis.
loyalist and senior parliamentarian Alexei Pushkov, who was included on a U.S.
list of sanctions imposed in the wake of the crisis in Ukraine, said the gas
deal showed Russia could not be isolated.
Obama should abandon the policy of isolating Russia: it will not work," he
tweeted, referring to U.S. President Barack Obama, who has pushed for greater
Western punishment of Russia.
Alexei Miller declined to say at what price the deal was struck, but sources at
the companies involved said Gazprom refused to go below $350 per thousand cubic metres.
to a price range of $350-$380 most European utilities pay under discounted
long-term contracts signed in the last two years. Putin said the formula was
similar to the European price tied to the market value of oil and oil products.
the implied price is crucially below the Asian cost of importing liquefied
natural gas (LNG), an alternative energy source it is developing.
imports will also help Beijing in its declared "war on pollution"
aimed at reducing its reliance on coal which contributes to the harmful smog
shrouding major cities.
potential sticking point in talks was whether China would pay a lump sum up
front to fund considerable infrastructure costs.
Putin, China will provide $20 billion for gas development and infrastructure,
but Miller said the two sides were still in talks over any advance.
The gas will
be transported along a new pipeline linking Siberian gas fields to China's main
consumption centres near its coast. Russia will begin delivering from 2018,
building up gradually to 38 billion cubic metres
(bcm) a year.
to invest $55 billion in exploration and pipeline construction up to China, and
CNPC said it would build the Chinese section of the pipeline.
for the full article from Reuters.