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Media Buzz: Hot Russian-Chinese Gas Deal
May 24, 2014 14:36

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Bloomberg has been positive about the deal signed between Gazprom Chief Executive Officer Alexey Miller and Zhou Jiping, chairman of China National Petroleum Corp. in the presence of the presidents of their respective countries.
The article by Elena Mazneva and Stepan Kravchenko focuses on the signal the signing of the historic contract sent to the markets, with the ruble strengthening “0.3 percent to 34.415 per dollar by 7:39 p.m. in Moscow, gaining for a third day” and OAO Gazprom (GAZP) shares advancing 0.8 percent to 146.58 rubles.
However, Russia risks to get stuck as a resource-based country, fears Bloomberg.
The New York Times’ Jane Perlez digs deeper into the rocky relationship between Moscow and Beijing, reminding the readers that the two countries “fought a brief but explosive border war in 1969, and later took opposite sides in conflicts in Vietnam and
The Guardian is more worried about the impact the deal might have on future gas prices for European consumers, including those in the UK.
It also cites analysts who say the venture is unlikely to be profitable for Moscow for at least the first several years of operations.
According to the Guardian, “the Chayanda and Kovykta gas fields are in the depths of eastern Siberia. The ‘strength of Siberia’ pipeline that will bring the gas to China through Vladivostok will run 4,000km (2,500 miles) through swampy, mountainous and seismically active areas.”
“To give Gazprom more wiggle room with the price and jumpstart the negotiations, Putin offered on Tuesday to exempt gas destined for China from taxes on resource extraction. In return, China reportedly offered to cancel import duties on the gas,” it adds.
Finally, BusinessWeek seeks to unravel the mystery of the price of gas to be supplied over the next 30 years. It points to the oil price benchmark raising the question of whether the parties ever know the real price of gas any time in the future.

It quotes Derek Scissors, an Asian economics scholar at the American Enterprise Institute, as saying that the price has not been worked out yet. “Scissors thinks it’s possible that Russia and China agreed on volumes of gas to be shipped, but decided to kick the issue of price down the road so they could start building the pipeline,” says the article by Matthew Philips. 

Author: Mikhail Vesely

Tags: Gazprom sanctions    

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