Caspian Report - Issue: 08 - Fall 2014

gaining door The surprise answer
was the oligarch Timur Kulibayev,
who is one of the critical directors of
Gazprom. He was brought in by the
company’s deputy chairman, Alexei
Miller, to revive negotiations which
had broken down when the Chinese
refused to pay the proposed prices. 15
Notably, the emerging bilateral trade
accounted for $90 billion in 2013,
and is set to increase to $200 billion
by 2020. Russia has a surplus in
trade with its main commercial partners—the
EU, Turkey, Ukraine, the
U.S. and Japan—but not with China.
In 2013, Moscow had a $10 billion
trade deficit in its trade with Beijing
and this gap is rapidly widening. Gas
exports to China, which will easily
reach $13-14 billion a year, will help
to offset the growing imbalances in
the trade relations between the two
countries. 16 As a result when we
analyse the Kremlin’s new strategy,
we can conclude that the geopolitical
situation shaped the decision,
namely the fear of losing the European
market and of the impact of
Western economic sanctions. Russia
demonstrated that is has and always
will have other export options. Furthermore,
China’s neutrality over
Ukraine has been a source of sup-
port for Russia. However, this is not
a sharp turn against the US or EU,
and this development does not provide
an instantaneously convenient
coalition or open economic alliance.
China aims to establish selective
cooperation in order to gain advantages
in Eastern Europe, and along
the Asia- Pacific axis. In the short
term, Russia’s decision strengthens
his hand vis-à-vis their plans for Europe.
Meanwhile, Russia is also looking
to seize LNG market share. 17
RUSSIA AND CHINA USUALLY STAND SIDE BY
SIDE, PROVIDING A UNIFIED FRONT AGAINST
WESTERN INTERVENTION IN MATTERS RANGING
FROM SYRIA TO SUDAN.
Russia and China usually stand side
by side, providing a unified front
against Western intervention in
matters ranging from Syria to Sudan.
On the Ukraine crisis, where does
China stand After this deal, will the
US give up on isolating Russia or EU
join this alliance Is Beijing maintaining
its traditional alliance with
Moscow, or has President Xi Jinping
been won over to Washington’s
side Is it time for Russia to play the
15.
The only non-Russian on the Gazprom board, Mr Kulibayev is paid $616,000 (£385,000) a year. He is a
son-in-law of the Kazakhstan President Nursultan Nazarbayev, whose nation provides a strategic and
geographical bridge between Russia and China. He joined Gazprom primarily because of his Chinese
contacts, based on a series of controversial business deals with its state oil company. “Piping hot:
How Putin won China gas deal”, The Independent, 30 May, 2014.
16.
“China Deal About Geography and Economics, Not Politics”, Natural Gas Europe, 5 June 2014, http://
95
CASPIAN REPORT, FALL 2014
www.naturalgaseurope.com/russia-china-deal-is-about-geography-economicsutm_source=N
atural+Gas+Europe+Newsletter&utm_campaign=57c3523984-RSS_EMAIL_CAMPAIGN&utm_
medium=email&utm_term=0_c95c702d4c-57c3523984-307767661 .
17.
The development of the Eastern Siberian gas fields will allow Russia to tap additional supplies
that can be exported onto tankers through the Pacific port at Vladivostok. And China, in a separate
deal, agreed to buy a smaller volume of LNG from the Yamal project, which will help support
construction of that undertaking in Russia’s Arctic. The combined effect stands to disrupt LNG
markets as Russia elbows in with large new supplies. That places new pressure on countries like
Canada, whose bid to be early to market has been eclipsed by Russia. See, Nathan VanderKlippe
and Brent Jang: “Massive Russia-China gas deal to shake up LNG markets”, http://www.
theglobeandmail.com/report-on-business/international-business/asian-pacific-business/
massive-russia-china-gas-deal-to-shake-up-lng-markets/article18783872/.