China signs 30 years deal for Russian natural gas_CHENGDU TIANYI NATURAL GAS COMPRESSOR MANUFACTURING CO.,LTD.

China signs 30 years deal for Russian natural gas

CNGCOMPRESSOR 2014-06-17 14:23

China signed a landmark $400 billion deal Wednesday to buy natural gas from Russia, binding Moscow more closely to Beijing at a time when President Vladimir Putin's relations with the West have deteriorated to the lowest point ever.China's president also called for an Asian security arrangement that would include Russia and Iran and exclude the United States.

The 30-year gas deal, worked out during a two-day visit by Putin to China, gives Moscow an economic boost at a time when Washington and the European Union have imposed sanctions against Russia and Europe has threatened to cut its gas imports to punish the Kremlin over the crisis in Ukraine.

The agreement enables Russia to expand the market for its gas, which now goes mostly to Europe.

It "opened the door for Russia to enter into Asia's gas market," said Keun-Wook Paik, senior research fellow at the Oxford Institute for Energy Studies.

Politically, the deal provides "breathing space for Russia," Paik said. "Russia, and Putin, can demonstrate it's not completely isolated because of the Ukraine crisis. Russia has demonstrated that they have a very reliable strategic partnership with China."

For China, the world's second-largest economy, the deal will help ease gas shortages and curb its reliance on coal.

U.S. Secretary of State John Kerry noted that Russia and China have been trying to work out an energy agreement for 10 years and said the deal "isn't a sudden response to what's been going on" in Ukraine."And if the world benefits as a result of that, that's fine," he said.

Similarly, State Department spokeswoman Jen Psaki said of the prospect of closer Russia-China relations: "It is not a surprise to us that countries that are neighbors communicating about how to work together, whether that's through an economic partnership or otherwise."

The agreement calls for Russian government-controlled Gazprom to supply state-owned China National Petroleum Corp. with 38 billion cubic meters of gas annually, Gazprom spokesman Sergey Kupriyanov told The Associated Press. That would represent about a quarter of China's current annual gas consumption of nearly 150 billion cubic meters.

Gas is due to begin flowing to China as early as 2018.

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China signs 30 years deal for Russian natural gas