China-Russia gas deal

[Greg.D.]

Maybe not as it seemed at first:

 

Is the Russia-China Gas Deal for Real—or Just Fumes?

in part:

.....

This is all just speculation, but the timing is worth noting, too. Just hours before the deal was officially announced, reports went out that the two sides had failed to come to terms over price. The next thing we knew, Putin and Chinese president Xi Jinping were shaking hands on a stage in Shanghai while the heads of their respective countries’ state-owned energy companies signed on dotted lines.

If Putin had left Shanghai without a deal, it would have put him in a weaker position in early June, when he will sit down with President Obama and German Chancellor Angela Merkel. Now, he’ll have proof that Russia can lessen its dependence on Western customers, insulating itself in the long run from sanctions over Ukraine. In the wake of the criminal charges that the U.S. just levied against Chinese military officials for allegedly spying on U.S. companies, China may have found itself inclined to stick it to the U.S. by helping Russia. As they say, the enemy of my enemy is my friend. At least for now.

[warpedbored]

Possible but one should also consider that Putin encouraging separatist groups in Ukraine and Chinese problems with the Uyghur people might make Beijing nervous as well.

[Greg.D.]

Russia and China are old friends/enemies .. I don't think China wants to become too reliant on that particular supply, they know what can happen. Both countries do want to steer as much trust, stature and good will from the US as they can. They recognize after Iraq and NSA this is a good time to strike.

Greg

[Randy W]

It seems to me that the major point he makes is this

 

Moreover, Russia’s president, Vladimir Putin, said that the price China pays will be linked to the price of oil, meaning that if the price of Brent crude rises 2 percent, so will the price of the gas Russia sells to China. So how can they know the value of the deal over 30 years when we can hardly forecast what the price of oil will be a month from now?

 

which hardly seems unusual.

 

The proof in this pudding will come if they actually begin work on the pipeline - which it sounds like they have every intention of doing.

 

Yes, the story here is in the politics - I'd be VERY happy to see China even BEGIN to get away from coal as an energy source.

[Randy W]

The story in the Global Times

 

$400 billion agreement secures supply for 30 years

China and Russia inked a mega natural gas supply deal Wednesday in Shanghai after a decade-long negotiation, with reports estimating that it is worth $400 billion.

 

. . .

 

"The price is estimated at $350 per 1,000 cubic meters, better than expected," Han Xiaoping, chief information officer of energy website china5e.com, told the Global Times.

This would compare favorably to the $350 to $380 or even $400-level price range Russia offered to Europe.

The price negotiation is linked with the oil price on the international market and crucially linked with the Asian gas price, which is mainly set up by import costs for liquefied natural gas (LNG) for major users, including Japan and South Korea, Zhou Dadi, vice-chairman of the China Energy Research Society, told the Global Times.

National Energy Administration data showed that China imported 52.7 billion cubic meters of gas in 2013. Zhou said the gas deal will become a good supplement for China's gas imports as demand will expand two to three-fold in the coming years, and most importantly, the pipeline gas will be cheaper than LNG.

CNPC said it will build the Chinese section of pipelines and infrastructure, while Russia conducts exploitation and pipeline construction in its territory.