Russia’s Gazprom has been in talks with China National Petroleum Corp for 10 years now, trying to create a huge gas deal for the Russia economy, one valued at over $400 billion although no official figures were released.
Vladimir Putin has been in Shanghai to try and negotiate the deal with Chinese officials, it appears the President of Russia needs an alternative buyer from traditional Western Europe countries, who might look for more sanctions.
Even though Russia is one of the biggest exporters of gas and oil in the world, Europe has been looking to step away from their supply as sanctions hit the nation harder, following their efforts in Ukraine.
The deal appears to be a hurried attempt by Putin to make sure they have alternative options and it also opens the doors to China for more negotiation, offering a superpower economy to Russia if they play their cards right.
China might have been pushing for a hard bargain and Russia caved into the Chinese demands, considering Putin’s position and China’s flexible economy, already purchasing gas from Turkmenistan and natural gas from Myanmar.
CEO of Gazprom, Alexei Miller, said that the new deal was the biggest in the entire history of the USSR and will send over one trillion cubic meters of gas throughout the 30 year deal, with more to follow if China are satisfied.
These deals might not be Russia’s last and China might take interest in the country’s global transportation and power infrastructure, while this might not be as valuable for Russia’s exporting economy, it will certainly give the country a much needed boost when it comes to infrastructure.
One pipeline, called The Power of Siberia will be sending all the gas to China. It was originally started in 2007, three years after preliminary deals were signed by both parties to start the agreement. The pipeline will not actually function until 2018, meaning the deal is just money at the moment.