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Friday, June 6, 2014

Troubled by gas?

"Friends always, nyet?"
The recent gas deal between Russia and China has been described by some as "historic". Worth some $400 billion (insane amounts) the deal nevertheless has some major
glitches,  namely the issue of pipelines for shipment to China. The Chinese government wants its own direct pipeline which will cost somebody about another $22 billion. Looks like Gazprom may have to cough up but this is still under negotiation.
It's importance at this stage appears to be more symbolic. Faced with sanctions and the Western concern over Putin's political manoeuvres , the deal can be seen as precautionary and a sort of "up yours "to the West. Considering the reality that exports will not commence until 2018 and that China cannot absorb any more gas imports
( nor does it need to ) the deal is fraught with potential disputes and economic pitfalls , particularly for the Russians.
So on the economic front Putin's raspberry may well go pear-shaped. Politically however it does signify that Russia and China are ready to step up their mutual cooperation.