Russia-China Gas Deal: Implications for Western Sanctions against Russia

In a monthly Operational Environment Watch commentary, EFD Fellow Anna Borshchevskaya discusses a possible agreement between China and Russia that would provide for building a gas pipeline from Russia to China, ensuring the supply of Russian gas to China. 

Russian President Vladimir Putin will travel to China in May. According to Russian and Western press reports, his visit may culminate in a historic gas deal, ending ten years of difficult negotiations between the two countries. The accompanying excerpts present the Russian media perspective.

China's National Petroleum Corporation and Russia's Gazprom, its national state oil and gas monopolist, have been negotiating an agreement which, if signed, will be the first accord of its kind between Russia and China. The agreement would provide for building a gas pipeline from Russia to China, ensuring the supply of Russian gas to China. Historically, the price of gas has been the stumbling block in these discussions.

Last year, in particular, Chinese and Russian officials intensified discussions. According to a 16 October Xinhua report, Chinese Vice Premier Zhang Gaoli said that China is willing to expand all-around energy cooperation with Russia; he hopes the two sides can work together to ensure the increase of Russian oil supplies to China, expand cooperation in upstream oil projects and set a refinery joint venture in Tianjin as a pilot project.

According to the second excerpt, from Torgovo-Promyshlennye Vedomosti (Commerce and Trade News), a publication of Russia's Commerce and Industry, Russia wants not only to sell gas to China but also to gain access to broader Chinese markets. For its part, China, as a major gas consumer whose energy needs are growing, would like to benefit from Russia's gas. According to Western press reports, China is also interested in developing energy projects in Crimea.

Torgovo-Promyshlennye Vedomosti adds an important political context. If the deal goes through, according to the publication, it will diminish the impact of Western sanctions on Russia in response to Putin's annexation of Crimea. Some Western press reports have missed this connection.

The article was originally published here.