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Why China is Driving a Hard Bargain with Russia Over Gas

Russian President Vladimir Putin ’s state visit to China this week has fueled speculation that both sides will finally reach a deal to supply Russian natural gas to China after a decade of wrangling. There are plenty of reasons Beijing and Moscow will finally see eye to eye. But an analysis of the situation shows they still have plenty of room to disagree. China and Russia have signed non-binding agreements before — most notably in 2009 and in 2013 — where they ironed out details that included the construction of a pipeline to ship 38 billion cubic meters of gas annually to China from fields in eastern Siberia. However, neither side has ever agreed on pricing . Analysts say Beijing and Moscow have never been closer to a deal. Russia needs energy customers due to its standoff with the West over Ukraine. China need to meet rising energy needs […]

Posted On : Published By : Tom Whipple
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Gazprom: All South Stream offshore contracts signed

Russian energy company Gazprom said all contracts for the construction of the South Stream gas pipeline’s offshore section have been signed. Gazprom touts South Stream — which would stretch about 575 miles long offshore and more than 900 miles through the territory of southern European countries — as an option to ensure European gas supplies are stable. Ukraine hosts the bulk of Russian gas supplies for Europe, exposing the European energy sector to the associated with ongoing disputes between Kiev and the Kremlin. Gazprom said it’s concluded all of the contracts needed to start construction of the onshore section of the pipeline later this year. It’s placed orders for more than 150,000 sections of pipeline already. Henning Voscherau, chairman of the South Stream board of directors, said the pipeline would be beneficial not only to European consumers but to stakeholders as well. "I am sure […]

Posted On : Published By : Tom Whipple
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Russia’s “Holy Grail” Gas Deal With China Now “Only One Digit Away”

We havebetween Russia and China on several occasions, and noted last week how it is expected to be signed this week – pending some final price negotiations . It appears that was spot on as Reuters reports, Russian state-run Gazprom said it was still “one digit” away from finalising a 30-year gas supply deal with Beijing which is expected to crown Russian President Vladimir Putin’s visit to China next week. On the heels of Russia’s de-dollarization meetings , the coming week appears a crucial one for the history books of the US Dollar as reserve currency (or will China leverage Russia’s need to diversify from Europe and stall the deal once again?) As we have discussed in detail , Russia has been in talks with China to supply it with 38 billion cubic metres (bcm) of gas a year for more than a decade but the deal has been […]

Posted On : Published By : Tom Whipple
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Putin’s China Visit Highlights Shifting Power Balance

When Russian President Vladimir Putin touches down in China for a closely watched two-day state visit May 20, he will encounter an unbalanced relationship that has grown in Beijing’s favor, tilted by shifts in global energy supplies and Moscow’s increasing friction with the West. Beijing’s leverage is being tested in negotiations to pipe Siberian gas to China that have dragged on for a decade, but that both sides have said they want to conclude in time for an agreement to be signed during Mr. Putin’s visit next week. A Chinese foreign ministry official said Thursday that pricing remains a sticking point. Gazprom , Russia’s natural-gas company, described the talks as being "in the final stage" after a meeting between its chief executive and a senior Chinese energy official. Mr. Putin has already leaned to Beijing in one respect. While he and Chinese President Xi Jinping meet in Shanghai, more […]

Posted On : Published By : Tom Whipple
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Putin's China Visit Highlights Shifting Power Balance

When Russian President Vladimir Putin touches down in China for a closely watched two-day state visit May 20, he will encounter an unbalanced relationship that has grown in Beijing’s favor, tilted by shifts in global energy supplies and Moscow’s increasing friction with the West. Beijing’s leverage is being tested in negotiations to pipe Siberian gas to China that have dragged on for a decade, but that both sides have said they want to conclude in time for an agreement to be signed during Mr. Putin’s visit next week. A Chinese foreign ministry official said Thursday that pricing remains a sticking point. Gazprom , Russia’s natural-gas company, described the talks as being "in the final stage" after a meeting between its chief executive and a senior Chinese energy official. Mr. Putin has already leaned to Beijing in one respect. While he and Chinese President Xi Jinping meet in Shanghai, more […]

Posted On : Published By : Tom Whipple
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China Gets Upper Hand in Russia Gas Deal

Russia’s conflicts on its western frontier are pushing it into the arms of its eastern neighbor. That could finally seal Russia’s long-promised natural gas deal with China—but more on China’s terms. Vladimir Putin is due in Beijing this month, and the conversation between the ex-superpower and the budding one is sure to involve energy. The Ukrainian crisis has Europe, which buys 75% of Russia’s gas exports, talking loudly about finding new sources. That means Moscow needs to court new buyers. It also needs to find new avenues of capital, considering a net $51 billion—equivalent to 2.5% of GDP—flowed out of the country in the first quarter. On both counts, China is Russia’s best bet. With a goal of doubling its gas market by 2020, China is one of the fastest-growing energy markets in the world. Plus, Beijing offers an alternative to Western funding. It has already struck financing deals […]

Posted On : Published By : Tom Whipple
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Minister: Gazprom Gas Deal with China Nearly Ready

Russian Deputy Energy Minister Anatoly Yanovsky said on Monday a long-awaited deal for natural gas producer Gazprom to supply China with gas was close to completion. "We hope that the negotiations will be completed as scheduled," Yanovsky told reporters, a little more than a week before President Vladimir Putin visits China. "The contract is, I would say, 98 percent ready." Gazprom, Russia’s top natural gas producer, has been in talks on gas supplies to China for over a decade. In April, it said it was aiming to finalise the deal this month. (Reporting by Katya Golubkova, Writing by Lidia Kelly, Editing by Timothy Heriatge) WHAT DO YOU THINK?

Posted On : Published By : Tom Whipple
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Russia Revisits Its History to Nail Down Its Future

As many Russians spent a holiday weekend reveling in the annual display of military might that marks their victory over Nazi Germany, the tension in Ukraine has fueled a passionate debate over how to exalt the country’s history without distorting it. The issue took on greater urgency with a new law, signed last week by President Vladimir V. Putin , that mandates up to five years in jail and heavy fines for anyone who tries to rehabilitate Nazism or denigrate Russia ’s World War II record. The Kremlin has long enshrined the history of the war against Hitler as a heroic, collective victory. But skeptics argue that the victory itself is too often used to promote what they consider an excessive obsession with fascism abroad — vividly played out over the past two months in lurid coverage on Russian state television of the Ukraine crisis. Some argue […]

Posted On : Published By : Tom Whipple
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Putin’s Export Machine Rolls Right Over Sanctions, Outcry

incursion into Ukraine and the international condemnation that followed haven’t put a dent in Russia ’s exports of gas and raw materials. The world’s largest energy producer shipped 2 percent more gas to Europe in the first three months of 2014 than it did in the same period last year, government data show. Diesel output for export increased, while cargoes of grains, palladium and nickel either climbed or were about the same. Russia’s crude oil exports fell 0.2 percent from last year. Economic sanctions from the U.S. and European Union haven’t dimmed demand for what Russia can sell even as price increases betray investors’ anxiety over future supplies. Any plan to pinch the country’s trade to punish Putin for his March annexation of Ukraine ’s Crimea peninsula would have to overcome Europe’s dependence on Russian gas and China ’s appetite for the country’s metals. “Investors are paying more […]

Posted On : Published By : Tom Whipple
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Putin's Export Machine Rolls Right Over Sanctions, Outcry

incursion into Ukraine and the international condemnation that followed haven’t put a dent in Russia ’s exports of gas and raw materials. The world’s largest energy producer shipped 2 percent more gas to Europe in the first three months of 2014 than it did in the same period last year, government data show. Diesel output for export increased, while cargoes of grains, palladium and nickel either climbed or were about the same. Russia’s crude oil exports fell 0.2 percent from last year. Economic sanctions from the U.S. and European Union haven’t dimmed demand for what Russia can sell even as price increases betray investors’ anxiety over future supplies. Any plan to pinch the country’s trade to punish Putin for his March annexation of Ukraine ’s Crimea peninsula would have to overcome Europe’s dependence on Russian gas and China ’s appetite for the country’s metals. “Investors are paying more […]

Posted On : Published By : Tom Whipple