The largest Russian and Chinese Gas Supply Deal

RUSSIAN Gazprom and the China National Petroleum Corporation (CNPC) signed a historic $400 billion contract for natural gas deliveries to China through the eastern route for 30 years during President Vladimir Putin's China visit on May 21, 2014. It is the successful outcome of negotiations for nearly 10 years between the two countries.

The gas supply deal between Russia and China is not only the largest economic cooperation agreement between the two countries but is strategically very significant. Since the development of the Ukrainian crisis, United States and its Nato allies have been increasing their pressure on Russia and threatening to expand economic sanctions. As a result, Russia desperately needed to find an alternative gas export market to its potentially troubled west European market. The gas export deal with China has opened the Asian window of opportunities for Russia. Now, the Russians can afford to feel relaxed.

BBC said that there is one pipeline already built, called 'the Power of Siberia,' that runs across Russia's far east to the Chinese border to transmit gas. But for the larger volumes of gas transmission from 2018, as per the latest agreement, additional pipelines will need to be constructed. Russians are particularly pleased as funds from the Chinese side will help continue the pipeline building and other associated construction works for gas transmission. China is already Russia's largest single trading partner. Their bilateral trade flows in 2013 was $90billion.The two neighbours aim to double the volume to US $200 billion in 10 years. The secured flow of Russian gas can help in attaining mutual targets.

(thedailystar.net Edited by Topco)