Russia signs landmark gas deal with China as Putin looks east

Russia on Wednesday signed a near $400 billion deal to supply China with natural gas over 30 years, opening up a new booming market for Moscow after it has been left increasingly isolated by the West over the Ukraine crisis.

The long-awaited agreement is a political triumph for Russian President Vladimir Putin, who is courting partners in Asia as those in Europe and the United States seek to isolate him over Moscow’s annexation of Ukraine’s Crimea peninsula.

The deal, which has been negotiated for about a decade, will directly link Russia’s huge gas fields to Asia’s booming market for the first time - via thousands of miles of new pipeline across Siberia that form part of the package.

“This is the biggest contract in the history of the gas sector of the former USSR,” said Putin, after the agreement was signed in Shanghai between state-controlled entities Gazprom and China National Petroleum Corp (CNPC).

“Through mutual compromise we managed to reach not only acceptable, but rather satisfactory, terms on this contract for both sides. Both sides were in the end pleased by the compromise reached on price and other terms,” Putin said.

Russia will begin delivering from 2018, building up gradually to 38 billion cubic metres (bcm) a year.

Putin loyalist and senior parliamentarian Alexei Pushkov, who was included on a US list of sanctions imposed in the wake of the crisis in Ukraine, said the gas deal showed Russia could not be isolated.

“(US President) Obama should abandon the policy of isolating Russia: it will not work,” he tweeted.

Obama has pushed for greater Western punishment of Russia.

Increased gas imports will also help Beijing in its declared “war on pollution” aimed at reducing its reliance on coal which contributes to the harmful smog shrouding major cities.

The gas will be transported along a new pipeline linking Siberian gas fields to China’s main consumption centres near its coast.

Russia plans to invest $55 billion in exploration and pipeline construction up to China, and CNPC said it would build the Chinese section of the pipeline.

(FRANCE 24 with AP, REUTERS)

Date created : 2014-05-21