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Russia And China Finally Sign Historic $400 Billion "Holy Grail" Gas Deal
There was some trepidation yesterday when after the first day of Putin's visit to China the two countries did not announce the completion of the long-awaited "holy grail" gas dead, and fears that it may get scuttled over price negotiations. It wasn't: moments ago Russia's Gazprom and China's CNPC announced, that after a decade of negotiations, the two nations signed a 30 year gas contract amounting to around $400 billion. And with the west doing all it can to alienate Russia and to force it into China's embrace, this is merely the beginning of what will be a far closer commercial (and political) relationship between China and Russia.
So far there have been no public pricing details on the deal which accrording to Gazprom CEO Aleksey Miller is a "commercial secret", and which is believed to involve Russia supplying 38 billion cubic metres of gas per year to China via a new eastern pipeline linking the countries.
According to Itar-Tass, the compromise between Russian gas export monopoly Gazprom and Chinese National Petroleum Corporation (CNPC) on Russian gas price is estimated at $75 billion, citing the Deputy Head of the National Energy Security Fund Alexei Grivach. The differences on the price for 38 and 60 billion cubic meters supplies a year were $1.5 billion and $2.5 billion, he added, so the subject of the negotiations is quite a significant one.
Gazprom expected a base price of $400 for 1,000 cubic meters, an expert of the Eurasian Development Research Center of the Chinese State Council said in April, whereas the CNPC’s proposal was $350-360 for 1,000 cubic meters.
RIA has more details:
According to Miller, only at 4 am local time it became clear “that all the principal issues have been solved.”
Russia and China have foreseen providing “preferential tax regimes,” Miller told journalists, without giving details.
Russia earlier suggested nullifying the extraction tax for gas fields delivering fuel to China, while Chinese officials expressed their readiness to cancel import taxes on gas from Russia, Rosneft CEO Igor Sechin said Tuesday.
Gazprom’s stocks rose 0.9 percent following reports that the long-awaited gas supply contract was signed. Russian stocks increased Tuesday amid positive aftermath of the first day of President Vladimir Putin’s visit to Shanghai.
In March 2013, Gazprom and CNPC signed a memorandum of understanding on the planned gas supplies to China along the eastern route via the Power of Siberia pipeline. The signing of the contract has been delayed several times as the two sides failed to reach an agreement citing a pricing issue as the main stumbling block. President Putin’s current visit to China became the final stage of the negotiating process.
The Gazprom CEO said earlier the company could receive advance payment from China for the gas, which could start flowing as early as 2018. The planned project has an estimated capacity to pump up to 38 billion cubic meters annually, which could later increase to 60 billion cubic meters.
A memorandum of understanding was signed in the presence of Russian President Vladimir Putin and President of China Xi Jinping on the second day of Putin’s two-day state visit to Shanghai. The price China will pay for Russian gas remains a "commercial secret" according to Gazprom CEO Aleksey Miller. Gas will be delivered to China's via the eastern 'Power of Siberia' pipeline.
RT producers were informed of the landmark energy deal prior to its signing after a conversation with Miller.
Under the long-term deal, Gazprom will begin providing China's growing economy with 38 billion cubic meters of natural gas per year for the next 30 years, beginning in 2018. The details of the deal were discussed for more than 10 years, with Moscow and Beijing negotiating over gas prices and the pipeline route, as well as possible Chinese stakes in Russian projects.
Just ahead of Putin's visit to Shanghai, Russian Prime Minister Dmitry Medvedev gave reassurance that the agreed price would be fair.
“One side always wants to sell for a higher price, while the other wants to buy for a lower price,” Medvedev said. “I believe that in the long run, the price will be fair and totally comparable to the price of European supplies.”
A major breakthrough in negotiations came on Sunday as Gazprom chief Aleksey Miller sat down with his CNPC counterpart, Zhou Jiping, in Beijing to discuss final details, including price formulas.
Although Europe is still Russia's largest energy market – buying more than 160 billion cubic meters of Russian natural gas in 2013 – Moscow will use every opportunity to diversify gas deliveries and boost its presence in Asian markets.
“I wouldn’t look for politics behind this, but I have no doubt that supplying energy to the Asia Pacific Region holds out a great promise in the future,” Medvedev said.
In October 2009, Gazprom and CNPC inked a framework agreement for the Altai project which envisions building a pipeline to supply natural gas from fields in Siberia via the western part of the Russia-China border.
In March 2013, Gazprom and CNPC signed a memorandum of understanding on Russian gas supplies to China along the so-called eastern 'Power of Siberia' route. When both pipelines are activated, Russia can supply Asia with 68 billion cubic meters of gas annually.
Last year, China consumed about 170 billion cubic meters of natural gas and is expected to consume 420 billion cubic meters per year by 2020.
Regardless of what the final price ended up being, and whether or not China got the upper hand in the negotiations, the final outcome is there and it is real: as a result of his disastrous foreign policy in the past two months, Barack Obama finally pushed Russia into China's hands, culminating with a deal that was ten years in the making and was never certain, until the Ukraine crisis.
And yes, this was all predictable from day one. Here is what we said precisely two months ago:
If it was the intent of the West to bring Russia and China together - one a natural resource (if "somewhat" corrupt) superpower and the other a fixed capital / labor output (if "somewhat" capital misallocating and credit bubbleicious) powerhouse - in the process marginalizing the dollar and encouraging Ruble and Renminbi bilateral trade, then things are surely "going according to plan."
For now there have been no major developments as a result of the shift in the geopolitical axis that has seen global US influence, away from the Group of 7 (most insolvent nations) of course, decline precipitously in the aftermath of the bungled Syrian intervention attempt and the bloodless Russian annexation of Crimea, but that will soon change. Because while the west is focused on day to day developments in Ukraine, and how to halt Russian expansion through appeasement (hardly a winning tactic as events in the 1930s demonstrated), Russia is once again thinking 3 steps ahead... and quite a few steps east.
While Europe is furiously scrambling to find alternative sources of energy should Gazprom pull the plug on natgas exports to Germany and Europe (the imminent surge in Ukraine gas prices by 40% is probably the best indication of what the outcome would be), Russia is preparing the announcement of the "Holy Grail" energy deal with none other than China, a move which would send geopolitical shockwaves around the world and bind the two nations in a commodity-backed axis. One which, as some especially on these pages, have suggested would lay the groundwork for a new joint, commodity-backed reserve currency that bypasses the dollar, something which Russia implied moments ago when its finance minister Siluanov said that Russia may refrain from foreign borrowing this year. Translated: bypass western purchases of Russian debt, funded by Chinese purchases of US Treasurys, and go straight to the source.
Here is what will likely happen next, as explained by Reuters:
Igor Sechin gathered media in Tokyo the next day to warn Western governments that more sanctions over Moscow's seizure of the Black Sea peninsula from Ukraine would be counter-productive.
The underlying message from the head of Russia's biggest oil company, Rosneft, was clear: If Europe and the United States isolate Russia, Moscow will look East for new business, energy deals, military contracts and political alliances.
The Holy Grail for Moscow is a natural gas supply deal with China that is apparently now close after years of negotiations. If it can be signed when Putin visits China in May, he will be able to hold it up to show that global power has shifted eastwards and he does not need the West.
* * *
To summarize: while the biggest geopolitical tectonic shift since the cold war accelerates with the inevitable firming of the "Asian axis", the west monetizes its debt, revels in the paper wealth created from an all time high manipulated stock market while at the same time trying to explain why 6.5% unemployment is really indicative of a weak economy, blames the weather for every disappointing economic data point, and every single person is transfixed with finding a missing airplane.
To conclude with the traditional geopolitical balance of power summary: Putin wins (again), Obama loses (again), and the monument to the dollar's status as world's reserve currency gets yet another tarnishing blow.
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I agree with the first part of your statement but Russia has a slew of nukes and would not hesitate to use them on some new and pretty cities in China if they had to defend their border.
As would China... Perhaps pre-emptively... And the plot thickens... Not that anything like this has ever been contemplated before... Operation Barbarossa, anyone?
Actually, Russia has a documented history of hesitation: http://en.wikipedia.org/wiki/Stanislav_Petrov
There is a very interesting film about this incident...
I've never felt so ambivalent in all my life. Its great that other countries are standing up to the western hegemony, but this could accelerate the already slow and assured decline of u.s. civilization as we've come to know it. ZH has been right in spades about hard times a'comin.
Let history books show that u.s. covert activity purposed to undermine the Ukrainian government and the subsequent unjustified sanctions out of the Obama administration levied against many innocent russians were most assuredly the tipping point. Its in motion. There's no going back now, boys.
China most have got a good deal.
Buh .. Bye PetroDollar
Not at $13 billion a year....
and the fact that the deal was done in... petrodollars...
USA Today, NY Times, WS Journal, CNBS and Bloomberg were all trumpeting the failure of the China-Russia gas deal just last night.
Anybody not think that both Russian and Chinese leaders viewed this as further impetus toward finalizing the deal?
As has been the case for the past six months (if not much longer) the US and its media armpits just got pwned, again, bitchez.
As much as I love my country, it pales before the amount of hatred I have for the politicians, bankers and media.
Roll them guillotines!
one wonders if they will trumpet the success of the signing today!
No, they might even intentionally totally ignore it.
In the middle of 2012 Vladimir Putin pledged to strengthen Russia’s economic and political ties with China after skipping a Group of Eight summit in the U.S. Russian President Vladimir Putin vowed to boost trade and cooperation with China after meeting Chinese leaders as the sides pushed back against Western calls for stronger action in Syria and Iran.
The two leaders also discussed North Africa, the Korean Peninsula and Iran's nuclear program. In total, Putin and Hu oversaw the signing of 12 agreements, including the the creation of a $4 billion joint investment fund. Putin's efforts are beginning to bear fruit as it now appears he has gained a lot of leverage and the power to annoy the West in many areas. Putin is now picking the fruits of his efforts. More on this subject in the article below.
http://brucewilds.blogspot.com/2012/06/putin-strenghtens-ties-with-china...
Good post! I to said the deal would be done. The relationship with a Capitalistic leaning industrial government in China after Deng, and Russia who share not just geographic area with China but, a balance of mutual need and ambition, was predictable. America under this and the last president is badly declining and shift of Reserve Currency is eminent. Both recognize the shift.
Unless we get a President that once again adherers to Jeffersonian principle we will continue this slide. Believing the lies of recovery won't make it true! We must have real capitalism to recover.
"Unless we get a President that once again adherers to Jeffersonian principle we will continue this slide. Believing the lies of recovery won't make it true! We must have real capitalism to recover."
Absolutely the only answer for recovery I would add that punishment for corruption at all levels must be swift and appropriate. Law and order must be restored, especially in positions of government and banking.
Can Obama and team really be this stupid? It is really hard for me to understand this. I'd like to think there are conspiracy theories that are right. But then I look to Occam's Razor and realize, "Yes. They are all that stupid and misguided. The other option is they are insane but I'm not sure how you can distinguish the two."
What part about "fundamentally transforming America" don't you get?
You are making the assumption the current pResident is loyal to the USA.
Your assumption is wrong.
Growing up most kids was at least bright enough to get the best folks for their pick-up game. The goals for each team is to make sensational plays and win the game. I can say a lot about the president; in short he can piick a darn good team just like anybody else, but if dumb was dirt he'd himself cover about half an acre. Now is his team stupid, misguided or insane? As counter-intuitive as it may seem, his team is darn near brilliant. If you list failures, theys sees them as accomplishments. Put his in the context of vice and virtue. In terms of humanity we halfways down the tunnel and there'll be no light, only darkness.
This might look like Putin's victory, but I doubt it would look so if the contract price is disclosed.
I think China has used every possibility to push the price as low as possible on those geo-political conflicts.
So no wonder the price is a secret. Many experts predicted that we're not going to be told what the real price is.
You don't play chess, do you?
If you did you would recognize checkmate when you saw it.
TPTB: "Agent X-15, you have done well. The USA is down another notch. Keep up the destruction."
Bacdoor Barry: "Thanks, Sir."
Mission almost accomplished.
Let's see a show of hands from all the clowns who were claiming this wasn't going to happen yesterday and calling people who said it would happens a bunch of idiots. You know who you are, and so do we.
http://www.amazon.com/The-Battle-Bretton-Woods-University/dp/0691149097
Worth the effort to see what other cannot to date Doc
Doc, we knew it would happen. All the Big Money is going East. The owners of the USG are ordering their servants in the USG to speed up the process IMO.
Agreed. It's kind of surreal witnessing this. Growing up in the 70s and 80s I never would have imagined this.
It is surreal! I grew up in the 60s. The USA we knew has been flipped on its head.
Now, yes, we know more now about the shadow .guv, but, we had a more cohesive, moral order then, too, amongst our people. We cannot regain self-power w/o improving our ethics.
All true. I was a teenager during most of the Reagan years. Would never have imagined this. Brings me to the unfortunate thing I want to say: I'm pretty sure the USA will go into civil war before the country is able to go forward--in which ever direction that would be. there will be unity afterward. I hope I am wrong about civil war.
There is a reason why the goverment wants to confiscate all civilian firearms, and a reason civilians are buying them in record quantities.
I wish you were wrong about the coming civil war, but you're not. There's no way to reverse course at this point. We have to go through the fire.
Unfortunately, the U.S. has become balkanized to the extent that any cohesiveness is nothing but a dream. I am sure we will see it strengthen via a continued balkanization into "regions" and that will be the beginning of the reset in my opinion.
The migration of free-thinking people to regions and states continue unabated. It's not always discussed openly because it's a difficult trend to measure and detect. The very data sought is naturally witheld by those with a clear mind and free ethos.
I agree that it is very surreal. What's right is wrong and what's wrong is right. Nearly everything is upside down. Where does it all originate? I have many theories but it just isn't clear enough to articulate.
I think we can all assume some basic premises though: Corrupt Government; Corrupt and Owned MSM; Corrupt FED and CORRUPTED FRN's; Out of Control Immigration; Open Borders; Pathetic Primary Education; Technology; Taxation; Twisted Nature of Corporate Greed; Corrupt Judicial System; Corrupt Prisons; War on Drugs; Wars; War on Terrorism; Department of Homeland Security; ETC.
Those are just a few of the contributors to a balkanized nation. Only solution is to truly starve the beast. Much easier said than done.
One recommendation I have for everyone: STOP your direct deposit.
"One recommendation I have for everyone: STOP your direct deposit."
Believe me I tried. I want to so bad. They are all "do you like getting a paycheck?" There is no alternative
for me. I think it's bullshit but what can I do? Get a new job?
I don't remember reading any comments that it wouldn't happen. Some, like me, pointed out China was in a position to get a pretty good deal.
Here's the main thread. Did you notice anyone saying it wouldn't happen?
http://www.zerohedge.com/news/2014-05-18/russias-holy-grail-gas-deal-chi...
There were plenty of them all through the day yesterday.
Try this thread from yesterday.
.
http://www.zerohedge.com/news/2014-05-20/birth-eurasia-russia-china-do-p...
"I hate to break the news to the uninformed but China and Russia just failed to sign the pipeline deal..."
http://www.zerohedge.com/news/2014-05-20/birth-eurasia-russia-china-do-p...
"Sorry bitchez, the deal fell through. Apparantly it's very difficult for two totalitarian shitholes to come to an agreement."
etc.
Is a 0bama a bystander?
Totally.
Gotta love the NY Times spin-masters:
China and Russia in Gas Deal, but Details Remain Murky
In other news, Russia is Bad! Chinese People Can't Be Trusted! Obama!
Fear and Loathing, people. RIP Hunter S. Thompson.
Speaking of reporter hits, one wonders if Gonzo wasn't on to something and was the first to be taken out.
So? When has a contract with China or Russia meant anything? This is the biggest non-event of the year.
What medium of exchange is the gas being paid for, is what i want to know. We assume its not Dollars, so what is it?
China produces plenty of things. the medium story is irrelevant as long as trade is balanced
China has imported a LOT of Au.
Just sayin'
Maybe it's part of the compensation.
since some time later last year reports have been circulating that swiss refiners have been recasting bars with 1960's date stamps on them - the vaults are getting emptied out all over for the flight east .....
....... but nobody seems to notice nobody seems to care......
Rakshas... I noticed and I care and I am certain that many others feel the same.
You should listen to the first half of this Max K report detailing phys silver swaps for real estate debt in China... very telling. Ignore the part about London RE.
All control frauds/Ponzi schemes eventually fail.
http://rt.com/shows/keiser-report/159940-episode-max-keiser-603/
What? They didn't get the OK from Goldman???
This is outrageous!!! Time to up the ante in Ukraine!
Maybe Goldman had Okayed it, or even helped plan it, years ago.
As for Ukraine, judging by Putin's calm and composure, I'd say the US/NATO subversive plot has already failed beyond salvage.
The US installed puppet government will likely be overthrown by the Ukrainians themselves once the IMF dictated austerity policies takes hold.
Why is still everything calculated in US Dollars ?
......to around $400 billion........
....... Russian gas price is estimated at $75 billion .......
........ were $1.5 billion and $2.5 billion ........
...... $400 for 1,000 cubic meters .......
How much is this in Roubles or in Yuan. One needs to update his spreadsheets according to the actual.
The numbers in US Dollar are moving to the column "memo value" now as far as the trade within Russia and China is concerned. This is the beginning or the end!
I suppose because it's easier for everyone to understand the numbers involved.
Would the numbers have any meaning to you if they were in yuan or roubles?
I live in China, but even I'd still have to convert them to US dollars before they'd have any meaning for me in energy-pricing terms.
I suppose because it's easier for everyone Americans to understand the numbers involved.
Fixed it for ya
How much in Gold?
Wait a minute! I was a bit hasty in assuming the deal was in yuan and/or roubles. I went through quite a number of articles and found nothing to support it.
Since there was no mention of it, I assume it is in US$. This makes sense from the Chinese perspective, given their huge reserves of US$.
The sad part is when america really starts unraveling, many of the enablers wont have to participate in the painful process because they are beyond its borders. We'll have to drag them back on flights from overseas to face the pitchforks and guillotines.
Suffice to say, we will want heads. Bloody heads on sticks.
I am afraid the dismal street scenes in Blade Runner were not imaginary.
I'm still at loss about how America would start "unraveling", though. honestly never saw a plausible scenario except slow decline (like the British Empire)
Maybe, they get a visit from the troika?
don't get me started... btw, where are you from, if I may ask?
He's an Elbonian.
Actually i'm from Airstrip One, Oceania. But now I remember us meet, when I was staying in the MudIn in Elbonia during my Eastern trip. So how are things in your country nowadays? ;-)
muddled, of course. don't forget to vote on the 25th, or you'll get the wrath of Voteman on your head
Actually, not muddled, but "Mud Inn", as in "Holiday Inn". My mistake, I forgot the second 'n' and it's two words..
But nevertheless + for Terminus, I appreciate his sense of humor.
Its the expediency and impetus of these anti-western actions that bother me. Many theorized that the death of the dollar would be brought on via hyperinflation, but few would expect it to come from a severe and abrupt lack of confidence. Who saw these us/russia/china developments coming a year ago? What are we not foreseeing a year from now? Saddle up your cock ghordo, america's ongoing and long term economic decline is now traversing a steeper part of the hill. Dont know how you contain yourself during your lectures.
I'm not sure I understand you. what lectures?
imho HY is a danger, for the USD. last year UBS tried to quantify it: a chance of 5% (every year), I guess at least until 2017. though remember the definition of HY: 50% devaluation (in one year)
similar to the bomber squadrons where airmen were sent only X times on missions because the chance of being shot down was 1%, if you survive, all is fine, while if you get shot down you see it as unavoidable... if you think that way
my bad.. one of your past comments seemed to indicate you were a lecturer of sorts, though i was unsure of what industry youre involved in
All paper money is simply a belief system.
When people no longer believe - the end.
Unexpected consequences of Q-Daffy bashing and Syrian proxy war via "concocted" Syrian Spring which went to winter very fast.
Trying to engineer political climate change big time is trying to play at God. Putin is his vengeful prophet or Count of Monte Cristo-Gazprom to wreak vengeance on those neo-ottoman Bey's rapists. He drew the line from Ukraine to Iran and then prolonged it all the way to Cathay to create Pipelineistan. Hats off to Pepe Escobar. The new silk route indeed.
Let God melt the Antarctic and lets play at being simple simons; not at King Dimon at Casino fatal, under the heel of the neo-con cabal.
I don't think you comprehend the dynamics if this country. It is becoming increasingly Balkanize and there is virtually no core set of beliefs that hold it together. Once the dollar goes all hell will break loose.
you'll still have Kim K, J Upton and Miley and Las Vegas and 300 million Colts and 50 million attack rifles and the Masters at Augusta.
As for Hell its already empty as all the demons are already here!
Next, Russia/China will build super mega space station with laser beams
Gold-Plated Laser Beam Weapons.
In the overall scheme, a few hundred $B over 30 years may not mean much but this is the biggest, calculated open slap in the face to the US and the USD. I'm pretty sure the chinese have been thinking this through very carefully and they obviously felt that the time was right. Putin no doubt took a lower price than he wanted but he'll head back to the motherland in a very good mood. And next he'll work on India and South Korea.
Right. The size of the deal isn't important; the fact that they created a model that others can use is very important.
and building the infrastructure. Once the spice starts to flow east, the flow will be expanded.
Russian and China making deals of the century and colluding to destroy the dollar.
While Obama Plays Golf.
Yea
This country is pretty much hopeless on a global stage kind of setting.
Its like all the nations are on stage participating in a play, and the USA is some autistic kid on stage who shits themself, while China and Russia are putting on a top notch performance.
Countries in Decline , USA, Japan, Germany , most of Europe,
Countries on the rise, China,Russia.
Communists +1 ,Oligarchy Corporate government thing that no one has a say in -1
Zero ia a tool and like all tools do not care what they are used for.
When you are never and have never been held responsible for anything a person simply does not care.
Russia and China colluding to destroy the dollar? No.
That's the US government and the Federal Reserve.
Germany is not in decline; it's just in a hole because it's been trying to save other European losers (Italy, Spain, Portugal, Greece etc), under US pressure.
FYI - expect WW3 to start prior to 2018
It started two days after Sochi.
That Russian psychic foretold it spot on.
Does he have a subscription newsletter ?
The final price is not important 300 350 400. What is important was that the deal got signed and relations became closer both on the record but more importantly off the record. Dont forget its the deals thath are done behind the scenes and the plans that are put in place that affect global politics more than what is shown in the media. Dont get me wrong the public anouncements are great and give you a feel of how things are flowing however the micro deals agreed out of the public eye and the papers written which detail how they plan to change world policies are the ones to find out about.
lets not forget its when sovreign nations or groups act as one that things change and that time could be soon.
The SCO was formed in 1996 and Russia/China were both founding members.
When viewed in this light, why is everyone so surprised that the Russia/China gas deal was signed? The goal of the SCO is to promote exactly this type of cooperation.
Of course, I have never heard the SCO mentioned in the msm.
http://en.wikipedia.org/wiki/Shanghai_Cooperation_Organisation
Looks like a strong lateral move, economic and political, across continent. also Japan, NK, SK all will gain improved NatGas prices (and non-LNG).
https://www.google.com/search?q=gazprom+pipeline+china&es_sm=93&tbm=isch...
Next is South Stream. Funding and deals will be easier now this big one is done.
I'm sure that a half Russian, half chinese "terrorist" will be detonating a bomb in manhattan any second now.
False flag ahoy!!!
The folks at the FBI and the CIA aren't that stupid. They would come up with something more like "a group of Chinese and Russians have been identified as likely culprits for a fatal terrorist bomb attack in NY that has killed at least n Americans."
Silver is now playing a part in Chinese real estate purchases, according to this report by Max K and Stacy H.
The report is a bit confused and takes off on a tangent of discussion of London RE prices but then returns to China.
"In China they swap $160K of RE dept for $60K of silver so either debts worth half or silver is worth double"
Max also notes that no one is willing to swap gold for RE debt and points out that Sandeep Jaitley forecast this development. Jaitley said that at some point no one would be willing to swap physical gold for any amount of paper.
http://rt.com/shows/keiser-report/159940-episode-max-keiser-603/
Also its a nice, quiet, relatively understated way to say "fuck you" to the neocons.
Very classy. Basically the polar opposite of how the west conducts its affairs these days.
True dat
CNBC writes:
"...The deal would see Gazprom—the world's largest extractor of natural gas—supply 38 billion cubic meters of gas to China annually for 30 years, according to Reuters, under a contract valued in excess of $400 million..."
Is that a slip or has it been done on purpose to influence algos (deal = "not important")
Both would be terrible.
On purpose, I'd say. It's not the first time, and won't be the last time.
Same for all other "news" networks.
All rosy up front. YES Russia HAD to sign a deal (to save face) but the details are very sketchy. Certainly it is not a price per thousand cubic meters over the life of the contract. Prices could soar in the Asian market. True Russian will find more gas along the route over the next couple decades. What will the construction costs be and I assume they will be borne by Russia. Russia is going to pay for the pressurization gas (that to fill the pipe and equipment prior to a single cu meter being used at the Chinese end. Will this pipeline go near the Muslim region of China (sabotage).
I guess Russia will use the gas credits to buy cloned Chinese copies of western technology. That should please Siemens and other technology companies.
How much is 400B in Yuan... because Yuan is no doubt the currency that will be used.
ATT: Deep State - do you realize you've just been told to FUCK OFF.
$400B??? That's 6 months of POMO - means nothing.
gas is real commodity.
POMO is pure fraud.
Putin to the Russian & Chinese sheeple-Here we go Bitchez!
And exactly why does Putin win? Becasue the price for nat gas is so low, they can't even announce what it is? Because if they do, ALL remaining customers will demand lower price too?
Plus, I don't see anywhere that China will pay in Yuan. Looks to me like the majority of payments will be in the 'almighty" USD!
---->. As expected.
----> Totally unexpected!
One of the Four Horseman?
On one hand you have to be very scared of the US (even if you're an alley). I'm talking about the Federal Government, not the average US citizen (who I like a lot).
But on the other hand, the government seems to be run by such a bunch of clowns, being scared of them isn't the way to go as they're normally always going to fuck it up.
Be afraid of who is at the helm.
No logic, only an agenda to destroy America because of a chip on the shoulder.
He thought he should be King and not a mere President.
CIA/NSA success, now with china and russia together, they need to drive India and mid east (iran) to join those two, then we can have a massive enemy and a new cold war to wage, think of the defense spending we will need, the taxation incr, the limiting of any freedom to fight the new enemy of freedom...wait orwell already wrote that book.
They would only do that if they had some serious 'ace-in-the-hole' weaponry that could salvage them in a last-minute winner-take-all senario. Do we have such weaponry? Some say we have that and more.
Very advanced hidden tech is plausible, however, to be a game changer it would have to be capable of nullifying the nuclear deterrent capability globally. Even (the most far-out) a-grav dreadnought weapons platforms moving silently from undersea to orbit and back mean nothing if ICBMs are still capable of hitting their targets.
Not a big deal. Two countries announce a trade deal and they will use their own currencies to settle. At the end of the day you still want to own dollars over any other currency...
Keep telling yourself that as your buying power keeps slipping through your fingers.
We have stagflation on wages and inflation on consumables; however, your money still buys what you need and will continue to do so for some time, I suspect. The dollar is still prized in countries I've travelled in. This deal may make things cozy for RU and CH, but I don't believe it will have a major impact on the dollar value long term. It's what the Fed is doing that is dispoiling the dollar.
The dollar is losing much of it's apeal throughout the world. Once the petro-dollar is dead so will what remains of your purchasing power.
Cable, -- true that I want to have a dollar during and at the end of my day. Though I must have my gold coin at the end of the week.
LOL
A thirty-year deal is not an agreement, it is an agreement to agree. Putin is running out of gas (so to speak) here in Ukraine. His aggression has met stiffer resistance than he expected from doormat Europe. He needed a China deal, and he has one. If his agreements with Ukraine and Turkmenistan (and his willingness to break them on a whim) are any guide, this is a negotiation that will need to be continually renegotiated.
It is long past time that these deals stop being denominated in dollars. The Fed got more mileage out of abusing reserve currency status than one could have possibly imagined. The only news is that it is news when two world powers decide to business in their own currencies instead of ours.
Russia and China need to cooperate to check western imperialism.
Inject some competition into the market.
Stir growth and demand.
"...check western imperialism."
Well, European monarchs are visiting /visited by China recently...
And what's the body language today with Xi "hiding" behind the CNPC guy?
Not what it seems...what's the invincible hand stirring?
Does this mean gas prices are going down at the pump?
No. But it does make a merger between Chevron and BP more likely.
Reunited and it feels so good
Reunited 'cause we understood
There's one perfect fit
And, sugar, this one is it
We both are so excited 'cause we're Re..U..Nited, heeey, heeeeey
Is this indeed a Holy Grail and a breakthrough deal? Let's looks at the details.
30-year contract provides for an annual gas supply volume of 38 billion cubic meters of gas. Is it much? For comparison, in 2012 Ukraine bought 32.87 billion cubic metersof Russian gas, so draw your own conclusions.
To implement the contract, Russia will need to invest another $ 55 billion in field development and pipeline construction. The price of gas to China, according to experts - $ 350-360 per 1,000 cubic meters (Russia refused to name the price). With Ukraine, for the supply of gas which does not require any capital investment, Russia is demanding $ 485 per 1,000 cubic meters. m.
From the sale of gas to Ukraine and Europe, the Russian budget was getting a lot of money, mostly from severance tax (tax on the extraction of natural resources). For fields where the gas will be delivered to China, this tax is nullified because its presence makes the export of gas to China at $ 350-360 unprofitable.
How much has Ukraine actually paid to Russia?
Good point! It is not how much you sell but how much gets paid for. Gas sold but not paid for in really just given away.
I think the size of this deal will grow in future years.
I've already posted this a few times...everyone keeps missing this...38 billion cubic meters is equivalent to 5% of the USA's total annual gas production (USA is currently #1 producer of natgas). It's a lot of gas, people!
The 38BCF/yr that goes to China won't go to Europe and it just gives Russia more pricing leverage. They're diversifying their markets.
I did the math and if this deal is really worth about $13.3B per year than that implies a price of $1/thousand cubic feet, which in my opinion is ridiculously low. I wonder if that get renegotiated upwards over time, or if the price is so low because the Russians get something (China pays to build the pipe? Some kind of investment in upstream projects?)
I guess China doesn't want to pay the regular price because Russia's far eastern oil fields were originally Chinese territory, taken by force under unequal treaties. It would probably be more cost effective if Russia just let the Chinese do the infrastructure projects, given the oil field's proximity to China.
As a side note, I don't think Ukraine consumes all the gas imported from Russia. It passes some of it on to other countries and receives some credit as transit fees.
I am completely clueless about these things, so please help me out. If I have understood correctly the picture is as follows:
NY price of NatGas per MmBtu today is: 4,485 USD
1 MmBtu => 28,32 Cubic Meters
NY Price = 0,158369 USD per Cubic Meter - Correct?
So if that is the globally recognized price of NatGas - why does a price ranging from 0,35 USD to 0,4 USD (350 to 400 USD per 1000 Cubic Meters) mean that they were taken to the cleaners and that the price is unprofitable as mentioned further above?
If it is assumed that the total value of the deal does not include Capex - and that the total amount is all gas (400B/(38Bx30)= 0,351 USD per Cubic Meter - how is it possible to have a NY Futures Price so incredibly out of wack with a published physical deal?
If looked at in another light - Putin said in the RT link that the price of the deal would follow the price of Oil - which suggests that it is a floating price formula, that has been agreed. If we look at the deal total value as including Capex and we use the public NY price, and we take into account that the deal is said to deliver 38B Cubic Meters per annum from 2018 with the capacity to rise to 60B Cubic Meters at some point with total capacity of the two pipelines at 68B Cubic Meters per annum - the calculation I arrive at looks like this:
Total Value: 400.000.000.000 USD
Capex: -70.000.000.000 USD
Gas Value: 330.000.000.000 USD
Value of 38B Cubic meters at NY Price -180.540.254.237 USD
Remaining Value for distribution later 149.459.745.763 USD
= Mmbtu equivalent at todays NY price 33.324.358.030 Mmbtu
= Cubic Meters at todays NY price 943.745.819.398 Cubic Meters
= Cubic Meters per year in 30 years 31.458.193.980 Cubic Meters
= Approx. 69,5B Cubic Meters in 30 Years = more than capacity in more years than can be assumed -> price adjustment
Since it is to be assumed that the deal will start at 38B Cubic Meters and only rise gradually to full capacity of 60-68B Cubic Meters per annum, that means obviously that the future price is set at a higher price than 4,485 USD per Mmbtu / 0,158369 USD per Cubic Meter. Many of us expects to see higher Crude prices as well, so having linked the future Gas price to Crude should result in the adjustment required to make these numbers make sense.
Lets pretend that the full deal scope of 60B Cubic Meters are achieved after 5 years - so there is an added delivery of 25 years x 22B Cubic Meters = 550.000.000.000 Cubic Meters. If we take the remaining value from above for distribution later of 149.459.745.763 USD / 550.000.000.000 Cubic Meters - we get a future Gas price of 0,27174499 USD per Cubic meter - or a 72% rise in price over 30 years for a commodity said to be in ample supply. And should energy prices go further bonkers - the price deal is linked to crude oil prices for further safety/inflation protection.
Does this sound completely unrealistic? And are my calculations completely wrong? Because I don't understand how the referenced prices of 485$ (Olga D above), 400$ and even 350$ (article prices) per 1000 Cubic Meters can co-exist with a NY futures price of 158$ per 1000 Cubic Meters. Can anybody tell me what I am doing wrong here?
Edit: And if I am not messing up with these numbers and if the price referenced for this deal is the pure gas price without capex - NY futures should go to 9,94 USD in short order to catch up.
Putin got taken to the cleaners.
In the past, the Soviets and the Chinese were at each others throats. This time around, the Russians and the Chinese will be at each others throats.
What a dumb deal for the Russians... All about optics.
Exactly....
A helluva lot of CAPEX for relatively small flows...
Any words on where the gas is to be sourced?
It's Obama's fault.
yes he is actually part of the problem https://www.youtube.com/watch?v=mRqu3WzE0io
Can we get a graphic of Putin hammering a stake through the heart of the EVIL BEAST?
Munchkins
Ding Dong! The Witch is dead. Which old Witch? The Wicked Witch!
Ding Dong! The Wicked Witch is dead.
Wake up - sleepy head, rub your eyes, get out of bed.
Wake up, the Wicked Witch is dead. She's gone where the goblins go,
Below - below - below. Yo-ho, let's open up and sing and ring the bells out.
Ding Dong' the merry-oh, sing it high, sing it low.
Let them know
The Wicked Witch is dead!
Mayor
As Mayor of the Munchkin City, In the County of the Land of Oz, I welcome you most regally.
Barrister
But we've got to verify it legally, to see
Mayor
To see?
Barrister
If she
Mayor
If she?
Barrister
Is morally, ethic'lly
Father No.1
Spiritually, physically
Father No. 2
Positively, absolutely
Munchkins
Undeniably and reliably Dead
Coroner
As Coroner I must aver, I thoroughly examined her.
And she's not only merely dead, she's really most sincerely dead.
Mayor
Then this is a day of Independence For all the Munchkins and their descendants
Barrister
If any.
Mayor
Yes, let the joyous news be spread The wicked Old Witch at last is dead!
Yes --- spread this wonderful news!
The filthy disease ridden hag is DEAD.
CHEVRON BP MERGER ANNOUNCEMENT BEFORE FALL!
TAKE IT TO THE BANK.
Let's just bring back the whole Rockefeller/Standard Oil thing. (sarc on)
I wonder if the price is "secret" because the real secret is that it will be priced in something besides petrodollars?
These chess/poker players just waiting for the right time to show their hand.
I assumed it was because Gazprom didn't want its European clients to know that it was giving China a 20% discount. That would piss them off mightily.
But I guess it's hard to keep that stuff secret for long. Should be interesting.
It will be barter arrangement with the gas priced in kg of Lo Mein....
FLAK...YES
Ultimately all deals are barter deals with currency in between. I must suspect one of the sticking points was 'hey, we don't know what a dollar or a ruble or the Yuan will be worth in the future, so how do we arrive at a long term price?'
Don't know what gold will be worth in the future either, nor any good. So how do we fairly price gas to be delivered in 5 years?
The dollar was handy for these kinds of issues but then it got destroyed and most see that the dollar won't be reliable for pricing good for much longer.
Trying to figure these kinds of issues out is what PhD economists do. I wonder if they are able to see the problem with the myopic focus on the dollar and it's current value.
Paid in Yuan/Ruble? I imagine USD is there too via the worthless US Treasuries China hold. Nice way to unload worthless shit to the sender. hahaha.
In a symbolic blow to U.S. global financial hegemony, Russia and China took a small step toward undercutting the domination of the U.S. dollar as the international reserve currency on Tuesday when Russia’s second biggest financial institution, VTB, signed a deal with Bank of China to bypass the dollar and pay each other in domestic currencies.
http://america.aljazeera.com/articles/2014/5/20/russia-china-bankdeal.ht...
the reporter of that Aljazeera article writes like a hired propagandist for US/London interests - regurgitating Western media BS for the most part, and offers no counter argument to obvious lies that anyone with some common sense could detect with ease.
Russia selling energy to China with little or no profit unless the government makes it tax/duty free? I guess that reporter received his "education" from some phony college program in the US then.
why is this deal valued in U.S. dollars? Isn't one of the main points regarding this whole aliance between China and Russia or the BRICS to exclude the dollar? So why write about the potential value of it in terms of dollars then? How about ounces of gold and silver, or rubles and yuan? Or pancakes with maples syrup for that matter?
There's no indication in any of the articles I read that this deal was not in USD.
This deal makes sense. Keystone pipeline should be so easy (not sure what Obama has to do with it really, other than he appears to have the power to keep it from happening). Playing nice with one's neighbors is a better idea than beating each other over the head every other decade. We all have to compete. Do it fairly. Go for it.
https://www.youtube.com/watch?v=mRqu3WzE0io
Very interesting 13+ minutes. Worth the watch. Thanks. Very interesting. NWO in high gear. So, is it Satan who is here, now, and pulling the strings? Would fit the biblical prophecies. What will be, will be. I'm doing all my hedging with Christ, so whatever moves I make, whatever future I face, I will not face it alone, or unarmed.
So the gas deal is signed yet gold plummets below $1300 AGAIN??? Insanity...
Are you trading gold? Then so what --- you KNOW where gold will end up right? And you know that every other asset will implode.
So chill out -- ignore the price of gold --- when the dust settles all will be fine.
You might want to buy more....
Thx bro! I needed that smack if reality! Gold to the MOON! lol
MM
99% of 'gold' selling is just Forex contracts that do not involve real physical....just a bunch of paper promises, as valuable as any paper promise. Unfortunately for physical gold advocates this trading also prices physical. It keeps the price low....HOWEVER...now that gold is stuck at a low dollar price it again becomes a great savings vehicle. Even if it never goes 'to da moon' one can now save physical and be fairly certain that when they sell it in the future they will get back what they put in.....and if it is revalued....well that would be even nicer...
A reminder, back in the 1970s when MAD (mutual assured destruction) and the communists' stated goal of global domination defined much of international politics the US foreign policy initiative aimed at splitting China from the USSR was an obvious choice. To separate China from Russia, strengthen our ties with China, and help develop the country made sense.
For straightforward geopolitical reasons America went down this path, but the path became a slippery slope, a slide greased by greed and short term self interest. Those who let this nightmare get of of hand should have been forewarned, "be careful what you wish for." More on the subject of how modern China was created by American in the article below,
http://brucewilds.blogspot.com/2012/09/china-made-by-america.html
The deals in dollars? What a bust... This deal was suppose to be in gold or Yuan or Ruble... ZH blew this one up again and its much to do about nothing. This was suppose to be a symbolic slam against the dollar instead its anything but...
The price details have not yet been released. They state it in dollars because that is what global trade is being transacted in ..for now
Oh but the details were released - the MSM is ignoring one key one:
IT IS NOT IN USD
In a symbolic blow to U.S. global financial hegemony, Russia and China took a small step toward undercutting the domination of the U.S. dollar as the international reserve currency on Tuesday when Russia’s second biggest financial institution, VTB, signed a deal with Bank of China to bypass the dollar and pay each other in domestic currencies.
http://america.aljazeera.com/articles/2014/5/20/russia-china-bankdeal.html
Deal is in $? Wtf?? Or they expect gold in payments??
The articles that are written for Western audiences state the prices in dollars so that Westerners can understand the numbers, but that does not mean the deal is in dollars. Last I read it was supposed to be in rub/yuan. I haven't seen anything new on that recently. Curious if anyone has an update?
Jim Willie! Yeah, baby, yeah! https://www.youtube.com/watch?v=J2HBdRCroks
Maybe US companies would invest in capex if they had any faith in the US government or the federal reserve. Companies are generally not retarded. They know that trying to build a factory almost anywhere in the US carries a lot of political risk.
This is your government. Would you invest your own life savings to build something when you know retards like this are in charge?
https://www.youtube.com/watch?v=o3I-PVVowFY