How the Russia-China Gas Deal Hurts U.S. Liquid Natural Gas Industry

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Russia and China finalized a truly massive gas deal during Russian President Vladimir Putin’s visit to Shanghai this week, and while the agreement is a bilateral one, its effects will be felt as far away as Texas and Louisiana.

The financial details remain murky – Gazprom CEO Aleksei Miller called them a “commercial secret” — but the total value of the contract is estimated at $400 billion. Russia agreed to deliver 38 billion cubic meters (bcm) of natural gas to China each year beginning in 2018, the equivalent of one-quarter of China’s current annual consumption.

The deal spans 30 years and solidifies what has often been a tense relationship between Moscow and Beijing. Russian media is calling it the “gas deal of the century.”

Even if Russia had to make large concessions to China on the final price, the deal gives it access to one of the world’s largest energy markets and diversifies its customer base away from a Europe looking for other suppliers. China, meanwhile, has gained a secure supply of natural gas for decades.

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