Russia Agrees To To Supply Gas To China, Pays With Euro To Separate From Dollar
MOSCOW - Russia has agreed on a 30 year contract to supply gas to China which will be fed to China through a new pipeline. China will be paying Russia for the gas in Euros in order to separate themselves from the US dollar which was outlined in the Russia-China Joint Statement published yesterday.
Gazprom, a Russian majority state-owned multinational energy corporation which currently holds a monopoly on gas exports via pipeline has agreed to send a fuel supply to Chinese National Petroleum Corporation (CNPC) which is one of the largest energy groups in the world.
Gazprom has agreed to send CNPC 10 billion cubit meters of fuel per year according to Gazprom and CNPC officials. Gazprom is set to begin sending fuel through the pipeline to China in two to three years time according to announcements form the companies.
A Reuters source in Beijing stated that gas from Russia's Far East island of Sakhalin will be transported by pipeline across the Sea of Japan to northeast China's Heilongjiang province, 'reaching up to 10 bcm a year' around the year 2026.
The Reuters source said "China's coal shortage last year served as another wake-up call that natural gas has its special value, that's why CNPC decided to top up with the new pipeline deal".
Ken Kiat Lee, an analyst at consultancy FGE said "Piped gas from Russia can be supplied to northern China at prices that are competitive when compared with LNG".
Russia and China had announced in 2020 their intention to reduce their dependence upon the U.S. dollar and become more financially independence from the United States, creating a 'financial alliance' between the two countries.
Alex Maslov, director of the Institute of Far Eastern Studies at the Russian Academy of Sciences told the Nikkei Asian Review in 2020 that the Russian-China 'dedollarization' was soon approaching a 'breakthrough moment' that could elevate their relationship to a 'de facto alliance'.
"The collaboration between Russia and China in the financial sphere tells us that they are finally finding the parameters for a new alliance with each other" Maslov had stated. "Many expected that this would be a military alliance or a trading alliance, but now the alliance is moving more in the banking and financial direction, and that is what can guarantee independence for both countries".
Heavy sanctions on China from the United States, as well as promised sanctions to Russia has seemingly influenced Russia and China to move into a closer, mutually beneficial economic relationship with one another, while becoming more and more independent from the West.