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who is the real winner here Moreover,<br />
will the sting of the economic<br />
sanctions with the trade between<br />
Russia and the EU be damaged, and<br />
what are the unknown costs Will<br />
this treaty bring important benefits<br />
to both sides Is it a real new beginning<br />
or largely symbolic Why has<br />
this contract impacted so heavily on<br />
global LNG prices In this section, we<br />
aim to analyse the factors that motivated<br />
the parties. First, from the<br />
perspective of capacity, the contract<br />
involves a partnership between the<br />
world’s top energy supplier and the<br />
consumer. Russia has the world’s<br />
largest natural gas reserves and China<br />
is the world’s biggest gas consumer.<br />
However considering the distance<br />
of the pipeline route, why go to China<br />
without Japan, Korea or European direction<br />
One reason is that East Siberian<br />
gas is too far away from Europe.<br />
The gas will be transported along<br />
a new pipeline linking Siberian gas<br />
fields to China’s main consumption<br />
centres near its coast. But, although<br />
the deal has political and commercial<br />
significance for China, it is far from<br />
constituting the cornerstone of a renewed<br />
Sino-Russian alliance against<br />
the United States, and does not fundamentally<br />
alter the dynamics of<br />
Asia’s gas market. 5 But one British<br />
energy expert warned that the move<br />
could drive up prices for European<br />
gas consumers who are becoming increasingly<br />
dependent on Russia, and<br />
now face competition for supplies.<br />
Russia will be responsible for building<br />
the plants, doing field development<br />
and constructing pipelines on<br />
its side, and China will be responsible<br />
for the pipeline construction<br />
within its own borders. (See Figure I)<br />
Second argument is reflecting the<br />
Eurasia hinterlands; this deal highlights<br />
the growing importance of<br />
robust Asian markets. It marks an<br />
important transition by Russia that<br />
shows his pivotal moment determination<br />
can use dual poles face either<br />
in Western side European energy<br />
markets or mirrors turns to the eastward<br />
direction in Russian energy<br />
91<br />
CASPIAN REPORT, FALL <strong>2014</strong><br />
Figure 1: Russia–China gas contract<br />
5.<br />
Michal Meidan, “Don’t Overestimate the China-Russia Gas Deal”, China & US Focus, 29 May, <strong>2014</strong>,<br />
http://www.chinausfocus.com/foreign-policy/dont-overestimate-the-china-russia-gas-deal/