In the 20 years since China and Russia signed an initial deal to build natural gas supply pipelines, the two countries have spent countless hours negotiating the detailed terms and conditions of the gigantic infrastructure project. But the effort finally paid off in May.
CEWEEKLY.cn reported that Russian President Vladimir Putin signed the deal at the last moment on May 21 with his Chinese counterpart Xi Jinping before he returned to Moscow from Shanghai. The 30-year contract is worth as much as US$400 billion and gives each side what they want. But it’s also a source of intense global speculation.
Russia had been hesitant to give the nod to the deal, but it now looks like it needs its Chinese friend badly. An unnamed person familiar with the matter said Putin was eager to sign the deal before he left, but China insisted on several provisos, demanding that its price be lower than that paid by Europe.
Russia is under pressure on more than a few fronts. Its resources industry in the country’s east has languished, export volumes and the price of natural gas to Europe have fallen and the US shale gas boom threatens to flood the natural gas market. A supply deal with China could help Russia deal with the fallout from the Ukraine crisis and European sanctions.
But China has been importing natural gas from Turkmenistan since 2009, weakening Russia’s hand during during negotiations, according to one source.
Nevertheless, Reuters described the closure of the deal as a political triumph for Putin, and Associated Press said the deal was a boost for the diplomatically isolated president, both financially and diplomatically.
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