On Wednesday, Russia and China signed a huge new gas deal that could be worth more than $400 billion. The deal heralds a move back east for Russia amidst the ongoing tensions over Ukraine with the West, though there were few details made public on the deal.
The contract for gas-export is for 30 years and seen as a move by President Vladimir Putin of Russia to shift aggressively the commercial interests of the country east amidst mounting pressure and sanctions from Europe and the United States.
The contract was signed as the leader of Russia enjoyed a welcome reception in China, where both countries have signed a number of agreements during his two-day ongoing visit.
The price Russia will receive from China for its gas is not known, but the agreement’s value is thought to be in the range of $400 billion.
The deal represents a bit of good news for each country, said an expert in international relations. The requirements politically on both sides are so strong they can overcome the price concerns. The expert called the deal political by both countries.
The talks involving this deal have been taking place for over a decade and will see the exporting by Russia of as much as 38 billion cubic meters of gas each year for the next 30 years, with the first year being 2018.
This contract for export is significant as it permits Russia to diversify its exports of gas from Europe, which had been threatening sanctions over the incursion by Russia into Ukraine.
The neutrality by China over the issue of Ukraine had started to tilt in favor of Russia, said the international relations expert, but this deal is not going to fundamentally change the relationship described as a convenient coalition but not an alliance.
This agreement is considered a selective cooperation because of the situation currently taking place in East Asia, the Western Pacific and in Eastern Europe.
Plans the two countries have already announced include the building of a railway bridge for the first time over their borders and the manufacturing in Russia of Chinese autos.