Russia-China gas deal 20 years in the making

This week, China and Russia signed a widely anticipated 30-year natural gas agreement in Shanghai. This agreement will diversify both sides’ energy consumption and supply structures, according to the 21st Century Business Herald. Some excerpts:

China and Russia began talking about natural gas cooperation as early as 1994.

Business, diplomacy and geopolitics all had roles to play in the final contract, estimated to be worth as much as $400 billion.

Both countries get advantages: China will have more leverage when it negotiates with the other natural gas exporters in the future. And Russia obtains a huge, new market outside Europe.

One key point was who should pay to build the pipelines. If China can pay in advance for the imported gas, Russia will use the money to build the pipeline.

No doubt the United States’ containment policies targeting China and Russia accelerate the inking of the commercial contract.

The gas from Russia accounts for only a small part of China’s overall energy consumption. Developed countries remain major trade partners for China.