This page has been archived and commenting is disabled.
Russia, China Delay "Holy Grail" Gas Pipeline Sequel As China's Economy Swoons
Last month in "PetroYuan Proliferation: Russia, China To Settle ‘Holy Grail’ Pipeline Sales In Renminbi," we outlined how Moscow was set to deliver some 68 bcm/y in natural gas to China via the Power of Siberia line and the "Western Route", or the "Altai" line. Here’s a quick recap:
In May, Chinese President Xi Jinping visited Moscow, where Gazprom Chief Executive Alexei Miller and China National Petroleum Corp Vice President Wang Dongjin signed a gas export deal which paves the way for 30 bcm/y to China via a new “Western Route.” Last year, the two countries ratified a "Holy Grail" gas deal for the delivery of up to 38 bcm/y over 30 years via an "Eastern Route." Also known as the "Power of Siberia" pipeline, the Eastern route was billed as the largest fuel network in the world with a total contract value of around $400 billion. Once the two pipelines are operational, China will become the largest consumer of Russian natural gas.
Because Russia and China are set to settle gas (not to mention crude) sales in yuan, we argued that the consummation of the pipeline deals serves as further evidence of de-dollarization and the collapse of petrodollar mercantilism, the system that’s served to underwrite decades of dollar dominance.
And while data released since then shows that for the first time, Russia has surpassed Saudi Arabia as the largest supplier of oil to China (further supporting the idea that the petrodollar is rapidly losing ground to the "petroyuan"), it appears that China’s economic slowdown will delay the implementation of the Atlai deal - indefinitely. Here’s more from Vedomosti (Google translated):
Signing a contract with China for the supply of gas through the pipeline "Altai" (or "Power of Siberia - 2") is delayed indefinitely, told "Vedomosti" two federal officials. The growth of the Chinese economy is slowing down, China is revising the energy balance, they explain.
Growth in demand for gas in China is slowing, while due to the fall in oil prices, China is becoming more accessible LNG, for example in Australia, says analyst "Sberbank CIB» Valery Nesterov.According to BP, when in 2012-2013. Gas consumption in China has grown by 12-13%, while in 2014 the increase was 8.5% and reached 185.5 billion cubic meters. m. In the first half of 2015 the growth was only 2%, says Nesterov, in this situation, "Gazprom" will not be able to get a high price of gas, "Altai".
"Gazprom" CNPC offers a high price, explaining its high cost of construction of the "Altai". China is ready to build a gas pipeline is cheaper and offers announced an open tender to his company can participate and construction costs become transparent, "- explains the President of the Russian-Chinese analytical center Sergei Sanakoyev," Gazprom "refused, China is in no hurry.
The representative of "Gazprom" declined to comment.
China offered to supply material resources, equipment and manpower, he said in May, deputy chairman of "Gazprom" Vitaly Markelov. The need to attract them to our territory is not, was not and will not be assured in late June, Deputy CEO Alexander Medvedev.
The daily goes on to suggest that the deal may need to be negotiated at the highest level - that is, between Putin and Xi Jinping:
By the first contract "Gazprom" and CNPC agree themselves and could not (the negotiations were 10 years old), the document was signed only after the talks Russian President Vladimir Putin and Chinese President Xi Jinping, reminds one of the interlocutors "Vedomosti". Most likely, and the second contract will also require political intervention, he said.
And here's more color from the Taiwan-based, pro-China China Times:
Despite strengthening political ties and military cooperation, the impasse on the gas deal suggests that the economic relationship between China and Russia is cooling, Duowei said.
On Wednesday, Chinese commerce ministry spokesperson Shen Danyang revealed that China's foreign direct investment in Russia dropped 25% in the first half of 2015 year on year. Earlier this month, China's General Administration of Customs released statistics that also suggested that trade between the two countries fell by 30.2% in the first six months of the year.
Additionally, the Moscow Times reported Thursday that weakened domestic and internal demand has seriously affected Gazprom's natural gas production, which fell by a record 19% year on year in June and 12.9% over the first six months of 2015, while export volume also dropped by 8%. In recent years, Gazprom has accounted for nearly 20% of Moscow's fiscal revenue and represented nearly 10% of Russia's GDP.
How much of this represents a "cooling" of economic ties between Moscow and Beijing and how much is simply a consequence of falling Chinese demand (a pervasive problem at the heart of the global commodities downturn) remains to be seen, but it's in both countries' best interest to strengthen their energy partnership, especially in the face of mouting tensions with the West, which is why we wouldn't be surprised to see the Altai line project back on track in relatively short order.
»
- 15207 reads
- Printer-friendly version
- Send to friend
- advertisements -
Russia and China are symbiotic entities, each benefiting from the other, and informally united against their greatest threat, the USSA aka Anglo American Empire. Further, to build Silk Road 2.0, the Chinese and Russian Partnership is critical to success.
Further, ifChina wishes to prevent the USSA navy from strangling their access to energy, they will proceed eventually. This is a long game.
Agree this is a long game. China and Russia can defer one of the pipelines - the one that goes from the Altai down to western China. The big one in the east will probably be completed but may require new negotiations about the price.
Meanwhile the Kremlin will have to cut back budget projections for the next 3 to 5 years. Good thing they have lots of reserves to play with - they will need them all.
Putin plays chess. Obama plays dress-up.
We know which one will get you your own TV show, now don't we?
China and Russia are not natural allies and have much to disagree with each other. They are already tense over the influence that China is exerting into the Stans, which Russia views as its historical backyard, and which China sees as its future economic lifeline.
I'm going to hit the Eurasianists with a dose of cold reality. Large neighbouring countries with two ambitious leaders have rarely been good allies, historically speaking. Add in linguistic and racial differences, Russia's continuing desire to regain superpower status, China's similar pretense... two prima donnas can't sing in the same opera.
Isn't it funny how now matter what, it is always claimed to be either a win by Putin or a master chess move?
Previously these unbuilt pipelines were claimed (by ZH and Posters) to show how Putin was not isolated, that there was now a combined superpower of Russia/China and they were firmly attached, that this marked (yet again) the death of the dollar as the world reserve currency and showcased the economic might of the combined countries. Not to mention how China was now to be independent of issues in the ME for energy and was preparing to be a military equal to the US and become assertive in pushing it's might away from home.
Once again all that huge talking up of the situation (even though it was not even built or due to be built for many years) has amounted to nothing. Once again the talk is about how this shows what a master chess player Putin is and how he (and China) are playing the long term.
Until the recent silly attempts to control the China stock markets I thought China was the real chess player. After that show of foolishness you have to wonder. However it is likely (as I have said before) that China is suspicious of Russia and has paid attention of how Russia/Putin abandones or sets up so called "allies" in the worst way.
Funny how, according to this article, they're 20% less symbiotic rather than 20% more symbiotic now that Washington and Brussels are turning the screws on Mr. Putin.
If I where Russia, I'd be very, very careful about China's ambitions.
Remember that Russia has appropriated (stolen) a lot of Chinese real estate.
The Chinese may be very patient but they do not forget nor forgive.
orez65
No, I don't remember "that Russia has appropriated (stolen) a lot of Chinese real estate."
Care to elaborate?
Well I am not sure but orez65 could be talking about the outer Manchuria?
https://en.wikipedia.org/wiki/Outer_Manchuria do read up, after the Opium wars the British may have gained Hong Kong but in terms of territory it was the Russian Empire that got most land!
The Red Dragon slayed! The Eagle soars, Freedumb restored! USSA hegemony reigns, the first battle in economic WW3 - USSA 1, China/Russia 0.
You forgot the /sarc.
/sarc Better? Seriously though, I really was hoping for this pipeline to go through sooner rather than later, the end of the petrodollar and end of USD as reserve currency can't come soon enough. These delays are irritating.
Hee hee...
He thought Russia and China were "on the same team" or something.
How cute!
This is an interesting look at China's economy for the next several months since they won't build it if they can't use the gas. Two years on things will be better...or worse......
Start new BRIC bonds, lend money to the people, create desire for products in BRICS nations and keep going. Forget exports to the West, they are toast.
I wonder how sour the Russians will be if China backs out.... sour enough to make any new deal impossible? Sour enough for ground troops (never, EVER, get into a ground war in Asia / with China!)...
Probably only sour enough to go for sanctions, that will be vetoed at the UN.
Still, Russia is cash poor, and losing the money from this deal will surely piss someone off.
toad, get back down your hole!
Interesting... down votes but no rebuttal, no comments of substance....
Butt, butt Russia and China were going to show the West a thing or two. Glad I didn't buy into that crap.
'round here, you'll get aggressively downvoted for any anti-china and/or anti-russia sentiments
...because communist china and near-communist russia are bastions of openness and strength LOL
....unlike the freedom human rights loving US, where you have habeaus corpus, no Patriot Acts, no NDAA and closing down of Guantanamo... /sarc off.
My encouragement of Russia/China has nothing to do with socialism/communism or notions of any superiority, but merely as tools for the needed implosion of the Western monetary/banking/centralized planning system. Whoever/whatever can initiate a total and systemic crash of the greatest fraud and manipulation in human history has my support.
As if China wants ANY of that "implosion" to occur in the next hundred years.
Murder, Poisoning, Raids: It’s Election Season in Russia
http://www.bloomberg.com/news/articles/2015-07-23/murder-poisoning-police-raids-it-s-election-season-in-russia
Puutie makes it very clear and transparent. Act in opposition and you may only go to prison, if you are lucky. Death seems to be the standard Puutie method to deal with those candidate.
Don't they have nailguns or auto and private plane "accidents" over there? Poison is traditionally a woman's tool.
I thought Puutie had agreed on MOU for the proect already? Chinese found the rat in the construction price ripoff of the Oligarchs who pay the bribes to the KGB Tsar rulling Russia now.
Moscow Times reported Thursday that weakened domestic and internal demand has seriously affected Gazprom's natural gas production, which fell by a record 19% year on year in June and 12.9% over the first six months of 2015, while export volume also dropped by 8%.
That decline will sure help the Russian economy. Will Puutie survive until year end?
Yeah, China and Russia were all dancing to "Bust a Move" when the US picked Iran for a prom date over Israel and the Saudis.
Now China is calling Putin THOT, and looking for someone without a reputation.
That prom date is about to get date raped as soon as they "fail" their first inspection... hahaha
this article was in the RT a few days ago i posted the link on ZH
Keep in mind when referring to Vedomosti that it's a France based ultra-liberal pro Washington yellow newspaper
http://whois.domaintools.com/vedomosti.ru
According to wikipedia "Business daily Vedomosti is a unique project. Financial Times and The Wall Street Journal, the world’s leading business newspapers, joined their efforts to bring it to life. Together with the largest Russian publishing house Sanoma Independent Media, they have been publishing Vedomosti since 1999."
It's chairman and ideologist Derk Sauer has been rabidly anti-Russia, and the Finland based holding Sanoma had been so hostile toward Russia that it lost the majority of its subscribes because people got tired reading everyday hateful an spiteful lies about Russia.
But otherwise, go on relay on this disinformation. It's not going to change anything. It's just will propel people to make the wrong financial decisions. That's it.
Something blah-blah about wikipedia as a reliably manipulated "source" of information....
Something blah-blah about FT being sold....
China knows that it doesn't need to create or buy pipelines, as much as borders...
Sanoma had been so hostile toward Russia that it lost the majority of its subscribes because people got tired reading everyday hateful an spiteful lies about Russia.
Sounds like Reuters, AP, Bloomturd, Financial Times, WSJ, UK Telegraph (which is kind of sad) or the rest of the shit media. I do not watch TV or Hollywood.
FT is now officially the property of Japan's Nikkei @ $1.7bln asking...
http://www.inquisitr.com/2278612/nikkei-has-bought-financial-times-for-1-7-billion/
Tom's dspatch and Pepe Escobar help us all,... 'wade the waxing' through the ebbing of "The Eurasian Big Bang", subscribed by Western 'MSM' as waning in the wind? NOT!!!
http://www.tomdispatch.com/blog/176026/
enjoy this somewhat`all'way's spot-on analysis
A pipeline within the Eurasian land mass can easily be protected with a land ARMY.
Russia and China together represent a two front strategic problem that Nato will be unable to overcome.
Removal of Petrodollar and hence Dollar as Reserve, then defunds U.S. MIC.
It's a long strategic game.