As Western consternation with their perception of Russian meddling in the sovereign affairs of neighbouring Ukraine continues, with the increasing likelihood of further economic sanctions against the former super power, Russia and China have agreed a deal on the supply of gas which has been ten years in the making.
Exact figures on the deal have not been made public, but it is suggested that it will be worth $400 billion over the thirty-year life time of the deal. Russia has naturally been keen to find other markets for its gas and the wisdom of this has been thrown into sharp relief by recent tensions in Ukraine with the concomitant threat of economic sanctions from Europe, a key market for Russian gas.
Speaking of the deal to Russian news broadcaster Rossiya, President Putin noted: "The price is satisfactory for both sides. It is tied, like it is envisaged in all our international contracts with Western partners, specifically our partners in Western Europe, to the market price on oil and oil products. It is an absolutely calibrated, general formula for pricing."
The deal could see 38 billion cubic metres of gas being supplied to China by 2018 to partially satisfy the energy needs of China’s ever expanding industrial sector. Use of gas as an alternative to coal in China’s electricity production would go some way to improving air quality which is negatively impacted by burning dirty coal as a means of producing power.
It is understood that the deal will see closer partnership between the two nations with China playing a role in developing Russian transportation infrastructure and power generation projects in a similar manner to Chinese deals for raw material access in some African states. China and Russia aim to double bilateral trade to $200 billion over the next ten years; China is currently Russia’s largest single trading partner.