China and Russia sign $400 billion 30-year gas deal

Russia Herald Thursday 22nd May, 2014

china and russia sign $400 billion 30-year gas deal

• Russia to invest $55 billion and China $20 billion in the deal

• Putin said the gas price would be based on a formula linked to that of oil and oil product

• Says it will be the world's biggest construction project

SHANGHAI, China - In a move that is likely to boost diplomatic confidence of an isolated President Vladimir Putin, China Wednesday signed a landmark deal to buy Russian natural gas worth about $400 billion.

The deal was signed by Russian energy giant Gazprom and China National Petroleum Corporation (CNPC). The pact commits gas deliveries to China via an eastern route, the companies said.

"The contract was signed on mutually beneficial conditions, and includes such basic conditions as the price formula pegged to the oil basket and a 'take-or-pay' provision," Gazprom said in a press release.

As per the pact, Russian will supply gas to China at a volume of 38 billion cubic meters per year with delivery along the eastern route.

The deal, finalized during a two-day visit by Putin to China, is estimated to be worth $400 billion.

Media reports said that price negotiations on the 30-year deal continued into the final hours before being signed.

"The document was under discussion for several years with the main stumbling block being the gas price, which the parties finally agreed on during a two-day visit of Putin to China," official RIA Novosti news said.

Putin said that Russia was planning to invest $55 billion and China around $22 billion in the gas deal.

"Without any overstatement, it will be the world's biggest construction project for the next four years," Putin said.

The first gas deliveries to China from Russia may begin in the next four to six years, with an advance for the supplies optionally possible at a cost of $25 billion, said Russian Energy Minister Alexander Novak.

The Associated Press said that the gas deal gives Moscow an "economic boost" as Russia is battling Western sanctions over its actions in Ukraine.

Washington and the European Union have imposed visa bans and asset freezes on dozens of Russian officials and several companies over Ukraine.

Putin met Tuesday with Chinese President Xi Jinping. The Russian president's visit is a "major step toward a strategic partnership of the two nations," said Mikhail Margelov, head of the foreign affairs committee in the upper house of the Russian parliament, according to RIA Novosti.

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Assad to Kremlin for Surprise Putin Talks

Syrian President Bashar al-Assad returned home Wednesday after making a rare trip to Russia to meet with President Vladimir Putin and discuss the Russian military campaign backing Assad's army that began three weeks ago.
Assad is not known to have traveled abroad since 2011, the same year security forces cracked down on peaceful protests and the situation in his country spiraled into a civil war that has left at least 240,000 people dead.
During Tuesday's meeting in Moscow, Assad thanked Putin for Russia's help, saying that without it "terrorism" would have spread to more areas.
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In this photo taken on Sunday, Oct. 18, 2015, a Syrian flag flies above the village of Maaloula, north of Damascus, Syria.

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He said the ground communication would serve as a back-up in case mid-air protections failed.
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"The Russians now need to abide by these flight safety protocols" in Syria, Cook said. "We don't want miscalculation."

Pentagon officials have stressed the air guidelines are not part of a broader agreement on how the two countries could operate in Syria. Nor do they indicate the U.S. is in any way supportive of what Russia is doing there. "We continue to believe that Russia's strategy in Syria is counterproductive and the Assad regime will only make Syrian civil war worse," Cook said.
FILE - Syrian army personnel, backed by Russian airstrikes, fires machine gun in Latakia province, near border with Turkey, Oct. 10, 2015.
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Cook asserted the United States will continue with its own strategy in Syria, attacking the Islamic State group and supporting Syrian moderates. The U.S.-led coalition has targeted Islamic State militants in Syria with more than 2,600 airstrikes since September 2014.
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