China's CNPC added a record 8,000 km (5,000 miles) of pipelines in 2013 to its total pipeline network of 60,000 km (37,000 miles) (photo: dpa)

The strategic implications of Russia’s record-breaking gas contract with China

Russian energy giant Gazprom has landed one of the biggest gas deals in history with China. But the 30-year contract, worth US$400 billion depends on laying thousands of miles of pipelines from new remote gas fields. It raises doubts about the profitability of the bilateral deal and which power emerges as the likely winner.

<i>Russian energy giant Gazprom is losing market share and under pressure from its domestic competitors Rosneft and Novatek in an over-supplied gas market in Russia. It has to cope with stagnating exports to Europe, its most important gas market. This forced Gazprom to make a record-breaking deal to export gas to China, but its price compromise raises doubts ...

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Dr. Frank Umbach
China has agreed to pre-pay US$25 billion before gas supplies begin and will invest another US$20 billion directly. Gazprom could not start pipeline construction without this loan
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