BBC reports that Russia signs 30-year gas deal with China between Gazprom, and the China National Petroleum Corp (CNPC) that has been 10 years in the making and is estimated to be worth over $400 billion, however the parties did not release details about exact price and volumes, China is thought to have driven a hard bargain.
While some suggest the geopolitical significance of the deal is that Russia will now be less vulnerable to sanctions from western sanctions over issues in Ukraine, this seems doubtful, at least for the next four years, because the pipeline will not star pumping gas into Chinese factories until 2018, in the most optimistic forecast, others suggest, its value in this regard is more symbolic. Although, it may immediately give a big compensating new game to play for the major energy sector billionaires inconvenienced and unhappy about bearing the brunt of western santions.
It seemed that President Vladimir Putin did not want to leave Shanghai without the deal and is thought to have made concessions to the Chinese on the price to have achieved it.
The agreement ... is expected to deliver some 38 billion cubic metres of natural gas a year ... to China ... was "the biggest contract in the entire history of the USSR and Gazprom - over 1 trillion cubic metres of gas will be supplied during a whole contractual period."
More important may be the investment that China will make into Russia's power and transport infrastructure. Putin may not have managed to sign the most advantageous of gas deals on Wednesday but the opening of economic doors with China could well be the greater achievement.
Rain Newton-Smith, head of emerging markets at Oxford Economics, said: "The whole tenet of the deal has a symbolic value - it says that the two countries are prepared to work with one another. For instance there were other elements such as Chinese participation in Russian transport infrastructure and power generation.
China is Russia's largest trading partner with $90 billion of foreign trade in 2013. They hope to double this volume in ten years. The article mentions that China has a history of bargaining hard for low prices on these kinds of long-term commodity contracts in return for agreeing to build infrastructure for the supplying country, especially in Africa.
What is interesting about this, is it would appear China is copying the same strategy the United States and the European colonial empires used during the expansion phases of our empires.
Notice that in this arrangement in return for "the favor" of agreeing to give China a very low price on Russian gas for the next 30 years, Russia will get in return Chinese investment in building Russian infrastructure. Down the "road' (so to speak :-) ) this will mean the Russians will have addititional "opportunities" to have Chinese companies, who are conveniently already there, with their standards, and products, in place, continue to build out their infrastructure, meaning roads and bridges, electric systems, water pipes, sewage system, telephone line and switching systems, and there banks and financial systems will be their to finance these projects and lend them the money.
Of course, they will need, to build new houses, consumer goods, refrigerators, and China will have to send them teachers to teach them Mandarin, etc. and soon "EurAsia" will be firing on all cylinders. Railroads will be transporting Chinese consumer goods directly down the major rail and transportation corridors right straight to downtown Moscow. Makes good sense.
Fairly clever, eh?
Makes one sort of nostalgic for the good ole (sic) days when we were part of a growing economic system and could imagine better days ahead of us for our children and grand children. But, then I'm sorry to be glum. What am I thinking? They are probably already learning Mandarin. What am I thinking. (Humor alert.)
