Experts assess Russian gas deal with China
Some experts say Russia seeks new alliances to 'counter-balance' West, others dismiss it as a publicity stunt by Putin.

Russian energy giant Gazprom's announcement Wednesday that it will start supplying China with natural gas from eastern Siberia should be viewed more as a public relations stunt by Putin than a serious move to expand into new markets, say some analysts.

The value of the deal announced -- $400 billion to supply 38 billion cubic meters of natural gas annually to China -- could fluctuate both in price and quantity, says Derek Scissors, an Asian economics scholar at the Washington-based think tank American Enterprise Institute.

The price of the gas is not announced and, according to Putin, is flexible, just like the quantity, says Scissors.

"Yet a dollar figure is announced. This is clearly a public relations move, not an actual value for the supply agreement," he says.

If Russia wants to expand into additional markets, it would have to undertake further development elsewhere, says Scissors. He adds that such quest would stretch the country's capacity.

"His [Chinese] hosts should have many questions," Scissors said. "Putin is making loud promises on this trip for diplomatic reasons." The agreement was signed during Putin's visit in Shanghai where he participated in a summit.

However, Dr. Shamil Yenikeyeff, a research fellow at the Oxford Institute for Energy Studies, believes the deal is a concerted move by Russia to aligning itself with new centers of power in the Asia-Pacific region.

Russia wants to "counterbalance the role of the U.S. and the EU in global affairs," says Yenikeyeff.

Russia’s relation with China is also important for the future of the Eurasian Union, Yenikeyeff says. The dilemma for Russian policy makers is where Russia will be in 30 years time, both politically and economically.

"I don't think the deal will have any major effects on the European gas markets," he says, adding that, "the key challenge for Europe is to diversify it sources for gas."

Although the EU is currently looking to reduce its reliance on Russian gas, it still remains Russia's largest energy market, buying more than 160 billion cubic meters of Russian natural gas in 2013.

Last Modified: 2014-05-23 09:34:09
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