Russia’s conflicts on its western frontier are pushing it into the arms of its eastern neighbor. That could finally seal Russia’s long-promised natural gas deal with China—but more on China’s terms.
Vladimir Putin is due in Beijing this month, and the conversation between the ex-superpower and the budding one is sure to involve energy. The Ukrainian crisis has Europe, which buys 75% of Russia’s gas exports, talking loudly about finding new sources. That means Moscow needs to court new buyers. It also needs to find new avenues of capital, considering a net $51 billion—equivalent to 2.5% of GDP—flowed out of the country in the first quarter.
On both counts, China is Russia’s best bet. With a goal of doubling its gas market by 2020, China is one of the fastest-growing energy markets in the world. Plus, Beijing offers an alternative to Western funding. It has already struck financing deals worth more than $300 billion for long-term oil supply with Rosneft, says Citigroup. C -0.67% That should convince Russia’s state-controlled Gazprom OGZPY +0.87% that it needs China National Petroleum Corp. more urgently than the other way around.
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Abheek Bhattacharya, The Wall Street Journal via CHINA US Focus http://ift.tt/1jtyPn5
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