China, Russia sign 30-year gas deal

SHANGHAI – China signed a landmark deal Wednesday to buy Russian natural gas worth about $400 billion, giving a boost to diplomatically isolated President Vladimir Putin and expanding Moscow’s ties with Asia.

Price negotiations on the 30-year deal continued into the final hours of a two-day visit by Putin to China, during which both sides had said they hoped to sign an agreement.

Putin was in Shanghai for an Asian security conference where China’s president called for a new model of Asian security cooperation based on a regional group that includes Russia and Iran and excludes the United States.

The gas deal gives Moscow an economic boost at a time when Washington and the European Union have imposed visa bans and asset freezes on dozens of Russian officials and several companies over Ukraine. It allows Russia to diversify its markets for gas, which now goes mostly to Europe.

Russia’s economy has been bruised by its dispute with the West over Ukraine’s tilt toward the European Union, a shift that inflamed Moscow’s insecurities about declining influence and sparked its annexation of Crimea in March.

The supplies will help to ease gas shortages in China, the world’s second-largest economy, and curb reliance on coal.

The agreement calls for Russian government-controlled Gazprom to supply state-owned China National Petroleum Corp. with 38 billion cubic meters of gas annually, Gazprom spokesman Sergey Kupriyanov told the Associated Press. That would represent about a quarter of China’s current annual gas consumption of nearly 150 billion cubic meters.

The contract is worth a total of $400 billion, Gazprom CEO Alexei Miller told Russian news agencies. Gas is due to begin flowing to China as early as 2018.

The U.S. treasury secretary, Jacob Lew, appealed to China during a visit last week to avoid taking steps that might offset sanctions. However, American officials have acknowledged China’s pressing need for energy.

The contract is “particularly important” at a time when Europe has threatened to cut gas imports and reduce its dependence on Russia because of the Ukraine crisis, said Alexander Lukin, a deputy head of the Russian Diplomatic Academy under the country’s Foreign Ministry, quoted by the RIA Novosti news agency.

“We will be able to show to Europe that we have other customers,” Lukin said.

China and Russia have been negotiating the deal for more than a decade but had been hung up over the gas price.

Plans call for building a pipeline to link China’s northeast to a line that carries gas from western Siberia to the Pacific port of Vladivostok. The development of a gas center on the Pacific will allow Russia to export to prosperous markets in Japan and South Korea.