- Long-coveted prize would allow Russia to switch sales from Europe to the Far East and transform the Eurasian gas market
By Ambrose Evans-Pritchard
19 May 2014
Russian president Vladimir Putin may have to accept unpalatable terms from China to clinch a massive gas pipeline deal in Shanghai this week, abandoning red lines defended tooth and claw by the Kremlin for the past decade.
The Russian state gas giant Gazprom said it is just “digits” away from an accord to supply North East China with 38bn cubic metres (BCM) for 30 years as soon as 2018. It is a long-coveted prize that would allow Russia to switch sales from Europe to the Far East and totally transform the Eurasian gas market.
Gazprom’s share price has soared 14pc this month as negotiations reach a climax. Investors are betting that the deal could be the start of an even greater build-up in gas shipments to Asia that would ultimately eclipse sales to Europe, currently 130 BCM, or 60pc of Gazprom’s revenues.
Mr Putin said the deal had “nearly been finalised” and was a perfect fit for both sides: allowing Russia to diversify its sales and letting China plug its “energy deficit” and switch to a cleaner fuel.