Russia is set to close a natural gas supply deal with China that Russian Prime Minister Dmitry Medvedev says will be 30 years, and valued around $400 billion.
Vladimir Putin, Medvedev's boss, will speak with executives in Shanghai today in order to close the deal. Medvedev told Bloomberg Television, "It's time we reached an agreement with the Chinese on this issue. It is very likely that there will be a contract, which means long-term contracts." It has been in the works for over ten years, with price as the major point of contention.
Simon Powell, head of oil and gas research at CLSA Ltd. in Hong Kong, told Bloomberg, "We expect the Sino-Russia gas deal to be finally ratified during President Putin’s visit and the pricing terms will not be too demanding for China."
Because of the sanctions Russia faces from the United States and Europe, Russia was put in a position where they could offer China a lower price to ensure a long term, profitable deal that would not be touched by existing sanctions. China was the only country on the United Nations Security Council not to actively disapprove of Putin's behavior towards Ukraine.
During Putin's trip to Shanghai, OAO Gazprom (the world's leading producer of natural gas) hopes to sign a deal with China National Petroleum Corp. China and Russia have a very lucrative trade partnership; they did $94.5 billion in business with Russia in 2013.