Russia, China sign 30-year gas deal
21 May 2014
Russian President Vladimir Putin on Wednesday signed a 30-year gas deal with China that would deliver 38 billion cubic meters of natural gas a year to China beginning 2018.
The agreement worth $400 billion, signed at a summit in Shanghai, is expected to give a financial boost to diplomatically isolated President Vladimir Putin.
While the actual price of gas is still under negotiations, the deal is tentatively expected to be worth around $400 billion over the 30-year period.
The deal, signed between Russia's Gazprom and China National Petroleum Corp (CNPC), gives Russia an alternative energy market for its gas as it faces the possibility of European sanctions over the crisis in Ukraine.
Russia has failed to find a new gas customer over the last 10 years while Turkmenistan has now emerged China's largest foreign gas supplier. China also last year started importing piped natural gas from Myanmar.
China, however, needs the gas to help it cut its coal-fired smog levels, and to diversify supply.
Currently there is one complete pipeline that runs across Russia's Far East to the Chinese border, called "The Power of Siberia". It was started in 2007, three years after Gazprom and CNPC signed their initial agreement in 2004.
But financing the $22-30bn cost of sending it into China has been central to the latest discussions.That would need further investments by China,
China is Russia's largest single trading partner, with bilateral trade flows of $90bn (£53bn) in 2013. The two aim to double the volume to $200bn in 10 years.