Decoding The Bamboo Curtain: China Signs a Gas Deal With Russia

Decoding The Bamboo Curtain: China Signs a Gas Deal With Russia

The days of the Iron curtain are over. The time of the Bamboo curtain has commenced. Even as Russia struggled with falling oil prices and trade embargoes, at least one reason is there for the former Soviet nation to celebrate and that is an accord with China, its former Communist ally.

Russia and China have just signed the framework agreement for a massive gas supply deal following the sealing of an USD 400 billion has deal as part of President Putin’s strategy to depend ties with Beijing. China has emerged as the superpower in Asia and if there is strength in numbers, even in this aspect, the Mandarin nation is not far behind. It has a booming consumer market which any company, national or international yearn to tap.

Alibaba may have rubbed the magic lamp and invoked the genie, but other companies hoping to catch up in the e-commerce biz would simply love to be in its place. With so much scope for development, an alliance with China would be beneficial for any country that hopes to tap the resources of this Asian superpower.

Putin has provided an eastward looking policy even as Western nations have imposed sanctions on Russia following the Ukraine crisis. China and Russia have have just last month signed the energy, trade and finance agreements. This includes a currency swap of about USD 25 billion and the aim behind this is to give the Eastern currency a chance to grow to the stature of the dollar. Of course, India and China have far from resolved their issues. Just after India launched its Make in India campaign, China unleashed its Made in China campaign.

Given that just about every product manufactured in the West now carries a Made in China tag, it is clear that the Asian superpower means business. The new gas deal between China and Russia will sell additional billion cubic meters of gas to China for 30 years through deposits from West Siberia and delivered through the Altai pipeline.

Earlier, the Russian state controlled Gazprom had agreed to supply 38 bcd to China through the east Siberian gas deposits. China will be the biggest client Russia has in this sphere. It is currently the world’s biggest consumer of energy and Russia is not going to forget that. The MoU pertaining to the agreement was signed between the top gas producer of Gazprom and state held China National Petroleum Corp."Cooperation between China and Russia is utterly important in order to keep the world within the limits of international law, to make it more stable, more predictable," Putin is quoted to have told Xi at the Great Hall of the People.

"Currently, Gazprom and CNPC are in talks over the fulfilment of the contract, and our leaders have just agreed to sign (a firm) contract in the first half of next year," Russian Energy Minister Alexander Novak told media reporters."The western route is becoming the priority for our gas cooperation," said Gazprom CEO Alexei Miller, adding that the main conditions, including the timeframe for building the pipeline and rate of increasing supplies, have already been determined. The two sides agreed that we will strive to sign the document soon, and a timeframe is also given – up to the end of 2015," he also added. ”The volume of gas supplies in the medium term could be 60 (billion) or 100 billion cubic meters of gas (a year)” the minister said.

CNPC will also purchase a 10% stake in Russian firm Vanforneft which is the subsidiary of Russia’s largest oil producer Rosneft. “We have reached an understanding in principle concerning the opening of the western route,” Putin told reporters “We have already agreed on many technical and commercial aspects of this project, laying a good basis for reaching final arrangements.”