May 20, 2014
Russia and China are due to sign a long-awaited gas contract on Tuesday, in which Beijing could pay up to $456 billion for Russian gas over the next 30 years.
While Russian President Vladimir Putin visits Shanghai on May 20-21,
Gazprom and the China National Petroleum Corporation (CNPC) are due to
sign a deal for 38 billion cubic meters of natural gas to power China’s
growing economy, starting in 2018.The timing is almost flawless as Russia is looking to shield itself from Western sanctions by pivoting towards Asia, and China desperately needs to switch from dirty coal to more environmentally friendly natural gas.
“The arrangements on export of Russian natural gas to China have nearly been finalized. Their implementation will help Russia to diversify pipeline routes for natural gas supply, and our Chinese partners to alleviate the concerns related to energy deficit and environmental security through the use of ‘clean’ fuel,” President Vladimir Putin said.
The deal has been on the table for over 10 years, as Moscow and Beijing have negotiated back and forth over price, the gas pipeline route, and possible Chinese stakes in Russian projects. The gas price is expected to be agreed at between $350-400 per thousand cubic meters. In January Gazprom gave an estimate between $360-$400 per 1,000 cubic meters but now Russian newspaper Izvestia has cited a Gazprom employee forecasting a lower range between $350-$380 per 1,000 cubic meters.
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