May 17, 2014 in Business

China, Russia on verge of signing gas contract

Louise Watt Associated Press

China faces chronic gas shortages, and talks on the proposed 30-year contract between Russia’s government- controlled Gazprom and state-owned China National Petroleum Corp. began long before the Ukraine crisis.

BEIJING – China plans to sign a multibillion-dollar deal to buy Russian gas during a visit by President Vladimir Putin next week despite U.S. pressure to avoid undermining sanctions on Moscow over the Ukraine crisis.

Washington has appealed to Beijing to avoid making business deals with Russia, though American officials acknowledge the pressing energy needs of China, the world’s second-largest economy.

Negotiations that began more than a decade ago had stalled over price. But analysts say Moscow, isolated over its role in Ukraine, faces pressure to make concessions in exchange for an economic and political boost.

“We are still exchanging views with Moscow and we will try our best to ensure that this contract can be signed and witnessed by the two presidents during President Putin’s visit to China,” a deputy Chinese foreign minister, Cheng Guoping, told reporters on Thursday.

Putin’s visit to China is also likely to highlight the diverging fortunes of the two powers. China is on track to overtake the U.S. as the world’s biggest economy in the next decade and is increasingly assertive in political relations with its neighbors. Russia’s economy is reeling from its dispute with the West over Ukraine’s tilt toward the European Union, a shift that inflamed Moscow’s insecurities about declining influence.

Putin is due to meet Chinese President Xi Jinping during a two-day conference on Asian security that starts Tuesday in Shanghai.

Companies from the two sides “have already reached an agreement on the majority of the contents of their cooperation,” said Cheng. “The main difference between them still lingers on the price of natural gas.”

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