Xi and Putin signoff on 30-year natural gas deal

BEIJING - President Xi Jinping and his Russian counterpart, Vladimir Putin, have signed off on a long-awaited gas deal in Shanghai, ending decade-long natural gas supply talks between the two neighbours. Under the roughly US$400 billion pact, Gazprom will supply China with 38 billion cu m of gas annually for 30 years, starting in 2018, through a planned Eastern pipeline that will connect Russia to Heilongjiang province and from there travel to industrialised cities along China's eastern coast.

The price of the gas, which was a sticking point in the negotiations, was not released, indicating it may be less than what Russia wanted or may not have been agreed upon at all. Russia, which exported around 160 billion cu m of gas to Europe last year, is under pressure to seek new energy buyers due to its growing friction with the West over Ukraine.

The new supply from Russia will increase the share of natural gas in China's energy consumption mix from the current less than 6% to 8% as Beijing looks to reduce China’s dependence on coal. China is the third-largest natural gas consumer in the world, using up to 168 billion cu m in 2013, an annual increase of 13.9%. It depends on imports for 30% of its supply.