China, Russia Sign Gas Supply Contract

China and Russia have announced a huge gas supply contract.

The deal between Russia's Gazprom and China National Petroleum Corp (CNPC) has been 10 years in the making. No official price has been given but it estimated to be worth over $400bn.

Russia has been keen to find an alternative energy market for its gas as it faces the possibility of European sanctions over the crisis in Ukraine.

Shares in Gazprom rose 2% on the Russian market following the news.

The agreement is expected to deliver some 38 billion cubic meters of natural gas a year eastward to China's burgeoning economy, starting around 2018.

The main argument has been over price and China is thought to have been driving a hard bargain.

Over the last ten years it has found other gas suppliers. Turkmenistan is now China's largest foreign gas supplier, and last year it started importing piped natural gas from Myanmar.
Siberian power

Another sticking point has been the construction of pipelines into China.

Currently there is one complete pipeline that runs across Russia's Far East to the Chinese border, called "The Power of Siberia". It was started in 2007, three years after Gazprom and CNPC signed their initial agreement in 2004.

But financing the $22-30bn cost of sending it into China has been central to the latest discussions.

China is Russia's largest single trading partner, with bilateral trade flows of $90bn (£53bn) in 2013.

The two neighbours aim to double the volume to $200bn in ten years.

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