As Putin looks east, China and Russia sign $400-billion gas deal

Wed May 21, 2014 11:46am EDT
 
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By Alexei Anishchuk

SHANGHAI (Reuters) - China and Russia signed a $400-billion gas supply deal on Wednesday, securing the world's top energy user a major source of cleaner fuel and opening up a new market for Moscow as it risks losing European customers over the Ukraine crisis.

The long-awaited agreement is a political triumph for Russian President Vladimir Putin, who is courting partners in Asia as those in Europe and the United States seek to isolate him over Moscow's annexation of Ukraine's Crimea peninsula.

Commercially, much depends on the price and other terms of the contract, which has been more than a decade in the making.

China had the upper hand as talks entered the home stretch, aware of Putin's face-off with the West.

But both sides could take positives from a deal that will directly link Russia's huge gas fields to Asia's booming market for the first time - via thousands of miles of new pipeline across Siberia that form part of the package.

"This is the biggest contract in the history of the gas sector of the former USSR," said Putin, after the agreement was signed in Shanghai between state-controlled entities Gazprom and China National Petroleum Corp (CNPC).

"Our Chinese friends are difficult, hard negotiators," he said, noting that talks went on until 4 a.m.

"Through mutual compromise we managed to reach not only acceptable, but rather satisfactory, terms on this contract for both sides. Both sides were in the end pleased by the compromise reached on price and other terms," the president said.   Continued...

 
Russia's President Vladimir Putin (L) and China's President Xi Jinping attend a signing ceremony in Shanghai May 21, 2014. REUTERS/Alexei Druzhinin/RIA Novosti/Kremlin