Vladimir Putin is a man intent on taking his business elsewhere in the face of increased economic sanctions. At the same time China has had to send ships to extract its nationals from Vietnam in the face of violent anti-Chinese riots in response the China's oil drilling in the South China Sea. It does seem like an optimal time to have a chat about gas and oil.
President Vladimir Putin’s planned China visit this week is helping spark the longest rally in OAO Gazprom since 2006 as speculation mounts that he will return with a long-sought gas supply agreement.So while western political leaders threaten sanctions that they seem to lack the political muscle to actually put in place, western investors will likely be keeping a very close eye on Gazprom stock.
Gazprom, the world’s largest natural-gas producer, has climbed eight straight days, rallying 15 percent over the period to 144.29 rubles ($4.15) in Moscow. The stock has gained 12 percent this month, compared with a 1.1 percent advance in the Stoxx 600 Oil & Gas index and the MSCI Emerging Markets Energy index’s 5.7 percent increase.
“Russia and China are closer to a deal than they’ve ever been before,” Karen Kostanian, an analyst at Bank of America, said by phone from Moscow last week. “While Russia seeks to diversify its natural gas exports away from Europe, China wants to diversify its fuel imports.”
Gazprom will have to spend about $56 billion through 2019 to build a new pipeline to China and develop the Kovykta and Chayanda gas fields in eastern Siberia to supply the gas, Kostanian said.