Editorial: Russia, China & Plans For Playground Expansion

Last week, Russia and China concluded ten years of negotiation by signing a three decade-long energy deal worth $400 billion and 1.14 trillion cubic metres of natural gas.

Under the watchful eyes of Presidents Putin and Xi Jinping, the Gazprom management committee chairman, Alexey Miller, and the China National Petroleum Corporation chairman, Zhou Jiping, put pen to paper on an agreement that ushers in a new era of cooperation – and interdependence – for the two states.

Beginning in 2019, the joint infrastructure investment needed to make the deal a reality is expected to exceed $70 billion - the world's single largest and costly construction project. Once the spigot is turned, Russia will command more than $350 per thousand cubic metres of gas.

China and India are expected to account for 56 per cent of the growth in world energy usage by 2040. The world’s largest energy consumer from 2010 onwards, the economic and industrial progress of the People’s Republic has stimulated a thirst for energy that Russia is only too happy to slake.

But a long-term gas covenant is not the only upshot of recent Russo-Chinese/Sino-Russian negotiation. In the wake of embargos and sanctions over activities in Ukraine, analysts are rightly looking at Putin’s wooing of the East as a counterpoint and warning to Europe and the US. Talk of modifying the status quo with regards to currency reserves management – tantamount to a de facto de-dollarisation – should also have knees knocking on Pennsylvania Avenue.

It looks like the playground may have to accommodate more bullies….

Tim Haðdar is the Editor In Chief at Oil & Gas IQ. Reach Him At Twitter Or OGIQ

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