Russia Set to Ink $100B Energy Deal with China
Bianca Ortega | | May 19, 2014 12:49 PM EDT |
Russia is scheduled to sign a deal worth $100 billion to supply China with cheap gas, as both countries start their joint military exercises on Tuesday. This deal will help weaken the international sanctions levied on Moscow.
For the first time, President Xi Jinping of China and President Vladimir Putin of Russia will watch the war games together. They will also hold their annual exercises in the East China Sea, which is an area claimed by both China and Japan, according to the Financial Review.
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Zhang Jian, an international affairs senior lecturer at the Australian Defence Force Academy, said the closer relations between Russia and China is designed to fight off the pressure that the US is exerting on both nations.
In exchange for the support in China's war games, Russia is seeking trade deals as it is becoming more isolated in the wake of the Ukraine issue. Putin and Xi are expected to ink a deal for Russia to pipe cheap gas into China during a summit this week in Shanghai.
The 30-year deal will begin with a value between $10 billion and $12 billion per year for the next 10 years, CLSA oil and gas analyst Simon Powell said. He also said the deal would make way for the sale of nuclear tech and fertilizer to China.
In March 2013, a tentative deal was signed for the Russian state-run Gazprom to deliver 38 cubic meters of gas to state-owned China National Petroleum Corp (CNPC) beginning 2018. The deal includes an option to up the volume to 60 billion cubic meters annually after completion of the pipeline.
On Thursday, deputy Chinese foreign minister Cheng Guoping said they will do their best to make sure that the two presidents will sign the deal when Putin visits China.
Earlier in May, the US has warned China not to make trade and investment agreements with Russia. This deal will most likely annoy the US.
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