May 21, 2014

Russia and China partner on $400 Billion Gas Pipeline Deal - Be afraid...

BloombergRussia is close to signing a decades-long contract to supply natural gas to China at a price that would value the deal at about $400 billion, according to Prime Minister Dmitry Medvedev.

Medvedev's boss Vladimir Putin arrives in Shanghai today to try and complete an agreement after more than 10 years of talks. The stumbling block has been price, but with Putin facing trade and financial sanctions from the U.S. and European Union after he annexed Crimea from Ukraine, a deal is seen as probable.

"It's time we reached an agreement with the Chinese on this issue," Medvedev said in a Bloomberg Television interview in Moscow yesterday. "It is very likely that there will be a contract, which means long-term contracts."

OAO Gazprom (OGZD), the world's largest natural gas producer, aims to sign a contract with China National Petroleum Corp. during the visit, Russian executives and officials have said. China, Russia's largest trading partner with $94.5 billion of business last year, was the only country in the United Nations Security Council not to censure Putin's actions in Ukraine.

"We expect the Sino-Russia gas deal to be finally ratified during President Putin's visit and the pricing terms will not be too demanding for China," said Simon Powell, head of oil and gas research as CLSA Ltd. in Hong Kong.

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