In its article which appeared today ("China and Russia ink $400 billion gas deal") the USA Today writes that the 30-year gas-export contract "is seen as a move by Russian President Vladimir Putin to aggressively shift the country's commercial interests east amid mounting sanctions from the United States and Europe, was signed as the Russian leader has enjoyed a warm welcome in China, where the two countries have inked a raft of agreements during his ongoing, two-day visit."
Commenting on the undisclosed price of the contract, the article writes: "The price is believed to be closer to what Russia wanted than what China was initially prepared to pay, said Thane Gustafson, a Georgetown University political science professor specializing in Russia. He said a prepayment for the gas, similar to what was agreed in oil deals, was dropped. 'This higher price level reflects China's willingness to pay more for cleaner fuel,' Gustafson said."
The article quotes Shi Yinhong, an international relations expert at People's University of China, in Beijing saying that "China's neutrality over Ukraine has begun "tilting" toward Russia" and that "this deal will not fundamentally change a relationship he called 'a convenient coalition, not an alliance.' The agreement is an example of 'selective cooperation, due to the situation in Eastern Europe, the Western Pacific and East Asia at this period,' but on some issues their concerns remain incompatible, he said."
The article headlined "Russia and China Agree on Long-Sought Natural Gas Supply Contract" published today in the Wall Street Journal reads: "China would become Russia's No. 2 gas market, behind Germany, under the deal, which would also tighten ties between the two neighbors as they seek a way to counterbalance U.S. influence in the world. Mr. Putin signed the accord with Chinese President Xi Jinping while on a two-day visit to Shanghai.Mr. Putin will return to Moscow with a concrete symbol of progress on his promise to deepen Russia's relationship with emerging markets in Asia, just as Moscow is facing economic sanctions from the U.S. and Europe as a result of the Ukraine crisis. The deal also strengthens Russia's hand as the European Union pushes to find alternatives to gas supplies from Russia, now its largest single supplier."
"By some accounts, China is getting a great deal. RBC Capital Markets analysts said implied terms will give China a steady supply of piped-in Russian gas at a price between 25% and 40% lower than the current cost of importing liquefied natural gas from overseas. The news could be less advantageous, though, for companies trying to build LNG export plants in the U.S. to ship American natural gas to foreign markets, including Asian buyers. 'The competition may have just got harder,' RBC analyst Peter Hutton said, alluding to the huge chunk of demand that the Russia-to-China pipeline will now satisfy. Globally, Royal Dutch Shell PLC, Chevron Corp. and Eni SpA are among the major energy companies that have proposed LNG export plants but don't have long-term contracts in place, and may find it tougher to lock in higher prices, Mr. Hutton said."
