China, Russia ink US$400 billion gas deal
By Louise Watt and Vladimir Isachenkov , AP
May 22, 2014, 12:03 am TWN
SHANGHAI--China signed a landmark deal Wednesday to buy Russian natural gas worth about US$400 billion, giving a boost to diplomatically isolated President Vladimir Putin and expanding Moscow's ties with Asia.
Price negotiations on the 30-year deal continued into the final hours of a two-day visit by Putin to China, during which both sides had said they hoped to sign an agreement. Putin was in Shanghai for an Asian security conference.
The deal gives Moscow an economic boost at a time when Washington and the European Union have imposed visa bans and asset freezes on dozens of Russian officials and several companies over Ukraine. It allows Russia to diversify its markets for gas, which now goes mostly to Europe.
The agreement "opened the door for Russia to enter into Asia's gas market," said Keun-Wook Paik, senior research fellow at the Oxford Institute for Energy Studies.
Politically, the deal has provided "a breathing space for Russia," Paik said. "Russia, and Putin, can demonstrate it's not completely isolated because of the Ukraine crisis. Russia has demonstrated that they have a very reliable strategic partnership with China."
Russia's economy has been bruised by its dispute with the West over Ukraine's tilt toward the European Union, a shift that inflamed Moscow's insecurities about declining influence and sparked its annexation of Crimea in March.
The supplies will help to ease gas shortages in China, the world's second-largest economy, and curb reliance on coal.
The agreement calls for Russian government-controlled Gazprom to supply state-owned China National Petroleum Corp. with 38 billion cubic meters of gas annually, Gazprom spokesman Sergey Kupriyanov told The Associated Press. That would represent about a quarter of China's current annual gas consumption of nearly 150 billion cubic meters.