Russia, China Fail to Reach Gas Deal

Day one, it's a Bummer, can't agree on price. Shadow boxing. Day two concessions from both. Or end of a new Sweetheart deal?


Chinese President Xi Jinping and Russian President Vladimir Putin before their talks in Shanghai on Tuesday. Xinhua/Zuma Press

  • Agreement is Priority for Putin as Europe Seeks to Extricate Itself From Moscow's Energy Grip

The Wall Street Journal
By Vanessa Mock
and Brian Spegele
20 May 2014

Beijing and Moscow failed to clinch an agreement to pipe Russian gas to China on the first day of Russian President Vladimir Putin's Chinese state visit, signaling that price disagreements remain an obstacle to the long-stalled deal.

Mr. Putin has made the multi-billion-dollar deal the top item of his two-day visit to Shanghai, where he and Chinese President Xi Jinping, pictured left, are participating in a regional security conference. Over a decade in the making, the potential 30-year contract would allow Russian state-owned gas giant OAO Gazprom OGZPY -1.73% to make a strategic shift toward Asia, just as the European Union is seeking to extricate itself from Moscow's energy grip.

The EU is accelerating plans to find alternative sources of gas and trying to stymie Gazprom's efforts to boost its presence on the Continent amid fears the Ukraine crisis could lead to disruptions of gas supplies to Europe.

"Russian needs this China deal very badly because it needs to signal to [Brussels] and to some EU nations that it's taking a step that's economically profitable and that it's found a new market for its gas," said Shamil Yenikeyeff, a research fellow at the Oxford Institute for Energy Studies.

But pricing has served as a major barrier to exporting to energy-hungry China. After their meeting Tuesday, the Chinese and Russian leaders signed a joint statement calling for Russian gas supplies to begin being exported to China as quickly as possible, according to China's official Xinhua news agency, but stopped short of announcing an actual deal.

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