Russia Clinches Gas Supply Deal with China

Russia finally clinched a $400-billion deal with China to supply the second world economy with gas via the Eastern Route for 30 years, opening a new market for Moscow in a moment of tensions with the West over Ukraine. Russia’s President Vladimir Putin and China’s President Xi Jinping took part to the signing ceremony.

Delegations of the two countries signed two documents, one for the pipeline and one purchase and sale contract. 

‘Russian Energy Minister Alexander Novak and Director of the China National Energy Administration Wu Xinxiong signed a Memorandum of Understanding on gas supplies via the Eastern Route,’ reads a note released on Wednesday. 

The intergovernmental memorandum has been negotiated for a decade.

Gazprom’s Alexei Miller and China National Petroleum Corporation’s Zhou Jiping signed the second document.

Miller refused to unveil the gas price. Analysts estimate the price at around $350 per 1,000 cubic meters, compared to $350-$380 for most European utilities. On Tuesday, delegations failed to agree on pricing, clearly indicating that it has been the bone of contention.

“I am absolutely certain that these prices will be comparable. But clearly, delivering to Europe is one thing and delivering to a new market is another. To attract a new market and to agree on all terms of collaboration, a variety of means is used to stimulate deliveries, including advance payments, bonuses and so on… I believe that in the long run the price will be fair and totally comparable to the price of European supplies,” Russian Prime Minister Dmitry Medvedev told Bloomberg TV on Tuesday, as reported on the website of the Russian Government.