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
“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.