The Russia-China gas deal, at long last
- By Tim Collard
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E-mail China.org.cn, May 27, 2014
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Chinese President Xi Jinping witnesses the signing of a contract to import natural gas from Russia's Siberia along with visiting Russian President Vladimir Putin in Shanghai on May 21. [Xinhua photo] |
![Chinese President Xi Jinping witnesses the signing of a contract to import natural gas from Russia's Siberia along with visiting Russian President Vladimir Putin in Shanghai on May 21. [Xinhua photo]](http://images.china.cn/attachement/jpg/site1007/20140527/001ec949c22b14ee3dd204.jpg "Chinese President Xi Jinping witnesses the signing of a contract to import natural gas from Russia's Siberia along with visiting Russian President Vladimir Putin in Shanghai on May 21. [Xinhua photo]")
So the gas supply deal between Russia and China, more than a decade in the making, has finally been signed as President Putin visits Shanghai. What is the significance of this deal and, more so, what is the significance of its timing?
Well, it is certainly a major factor in global energy economics. The deal between Gazprom and China National Petroleum Corporation (CNPC) features a duration of 30 years, lasting almost to the mid-century. The volume of gas to be supplied is to reach 38 billion cubic metres per year, covering a significant proportion of China's energy needs and making China Russia's second biggest gas market -- after Germany. Analysts have estimated that Russia's gas export to China will double by 2020 and triple by 2030. The promised investment in the pipeline amounts to US$75bn, US$55bn of which is to come from Russia, including the development costs of two major gas fields in Russia's far east.
As China's gas consumption figures for 2013 already stood at 170 billion cubic meters, the Russian input will be very timely, even though the pipelines are not due to become active until 2018 or so -- no precise details were revealed on how long it would actually take to construct the pipeline. Meanwhile, China's requirements are due to reach 420 billion cubic meters by 2020. The Chinese domestic production of unconventional shale and coal-bed methane gas may not kick in until the mid-2020s.
The Russians are naturally delighted that this long-lasting saga appears to have reached a successful conclusion. From their point of view, it sets the seal on a reorientation of global geopolitics, underpinning the cooperation between themselves and China, which they hope will form a counterweight to the perceived hegemony of the United States and its allies. The head of the Russian Duma's foreign affairs committee, Alexei Pushkov, was quoted as saying, "Barack Obama should give up the policy of isolating Russia; it won't work." The Russians also feel they might benefit from the current tensions between the United States and China; China is currently suspicious of the intentions of U.S. President Obama, following his recent interpretation of the U.S.-Japanese alliance as well as talks with Vietnam and the Philippines on South China Sea issues.
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