Fair Observer: Russia: The Chinese Gas Station of the Future?

In May, Russian President Vladimir Putin triumphantly returned home from a two-day state visit to China. Ostensibly, he was there to participate in a regional security conference. More importantly, he was also there to help push through a vital natural gas deal, worth around $400 billion, that would secure Russian gas for the Chinese market for the next 30 years.

The contract, between Russia’s Gazprom and the Chinese National Petroleum Corporation, has been under discussion for the better part of a decade. The deal represents a broader Russian shift away from dependence on European energy markets, and instead a growing economic and political partnership with China. In 2012, 76% of Russian gas traveled to Europe, but Eurocrats in Brussels and statesmen across the continent are becoming more and more reluctant to rely on Russia as a long-term energy supplier due to recent events in Ukraine.

Shifting East: Ironically, as Moscow tries to pivot eastward, one of the key stumbling blocks to the gas deal was price negotiation. Gazprom wanted to use high European prices as a benchmark for its Chinese trade, while Beijing wanted a lower price to match what it pays for gas from Central Asia.
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