Mos­cow and Beijing

The Washington Post - - FRONT PAGE - BY ROBYN DIXON [email protected]­

marked the in­au­gu­ra­tion of a gas pipe­line that runs from Siberia into China, in a sign of warm­ing ties.

MOS­COW — When Rus­sian nat­u­ral gas flowed into northern China on Mon­day, as Pres­i­dents Vladimir Putin and Xi Jin­ping or­dered the taps open, it sent geopo­lit­i­cal rip­ples across the globe.

On one side of the border, Rus­sian gas work­ers stood at at­ten­tion in the Ata­man­skaya gas com­pres­sor station near Blagoveshc­hensk, close to the Chi­nese border, wait­ing for Putin’s or­der to start the flow. Across the border, their Chi­nese coun­ter­parts stood ready to re­ceive the gas.

The mo­ment was cap­tured on a video link be­tween the two pres­i­dents. The $55 bil­lion pipe­line, Power of Siberia, runs almost 1,865 miles from gas fields in Irkutsk and Yakutsk in Siberia to the Chi­nese border. It rep­re­sents the lat­est pow­er­ful sym­bol of the grow­ing ties be­tween Mos­cow and Beijing, even as China and the United States are en­gaged in a trade war.

The pipe­line en­ables Rus­sia to tap into China’s vast, ex­pand­ing mar­ket for gas as part of a 30-year, $400 bil­lion gas sup­ply con­tract that prom­ises to soften the im­pact of Western sanctions on Rus­sia over its 2014 an­nex­a­tion of Crimea. In China, the pipe­line will run 3,175 miles from Hei­longjiang prov­ince in the north­east to Shang­hai.

The con­tract be­tween sta­te­owned Rus­sian gas gi­ant Gazprom and the China Na­tional Pe­tro­leum Corp. al­lows Mos­cow to di­ver­sify its mar­kets away from Europe, where most of its gas has flowed in the past.

Rus­sia and China have been mov­ing closer, de­ter­mined to counter U.S. global power. At a June meet­ing in St. Peters­burg, where the two coun­tries signed a flurry of trade deals, Xi called Putin his “best and bo­som friend” and an­nounced that Beijing would send two pan­das to Mos­cow, al­ways a sign of Chi­nese diplo­matic warmth.

In a sym­bol of the strength­en­ing mil­i­tary ties be­tween Mos­cow and Beijing, Rus­sia and China staged their first joint air pa­trol in the Asia-pa­cific re­gion in July, scram­bling Ja­panese and South Korean air de­fenses.

Rus­sian sup­plies to the Chi­nese gas mar­ket could cre­ate ob­sta­cles for sup­pli­ers of pricier U.S. gas and help strengthen Beijing’s hand in trade talks with Wash­ing­ton.

The Rus­sia- China gas pipe­line launch comes as Rus­sia races to fin­ish a western pipe­line via the Baltic Sea to Ger­many, Nord Stream 2, which would al­low Rus­sia to pipe gas to Europe while by­pass­ing Ukraine.

Rus­sia has 20 per­cent of the world’s nat­u­ral gas re­serves and ac­counts for 17.3 per­cent of global gas pro­duc­tion, sup­ply­ing nearly 21 per­cent of Europe’s pipe­line gas im­ports.

Alexan­der Gabuev, an an­a­lyst on China-rus­sia re­la­tions at the Carnegie Mos­cow Cen­ter, said that the Power of Siberia pipe­line sent a mes­sage to Europe and the United States about closer ties be­tween Beijing and Mos­cow but that even­tu­ally China could use it to ex­ert pres­sure for lower gas prices.

“The deal is a sym­bol of Putin’s pivot to China,” he said.

“In the longer term, cheap pipe­line gas from Rus­sia will be in com­pe­ti­tion with Amer­i­can gas,” Gabuev said, but be­cause the Rus­sian pipe­line has just one cus­tomer — China — Beijing could ex­ert pres­sure on Rus­sia, push­ing gas prices down.

En­ergy an­a­lyst An­drew Hill, head of the S&P Global Platts gas and power an­a­lyt­ics team for Europe, the Mid­dle East and Africa, wrote in a re­cent blog post that Rus­sia’s po­si­tion in global gas sup­plies has never been more dom­i­nant.

“This priv­i­leged po­si­tion of re­source en­dow­ment gave Rus­sia a strength it has had no hes­i­ta­tion us­ing to fur­ther its own po­lit­i­cal, geopo­lit­i­cal and strate­gic aims over the years,” he said.

Hill added: “The deal with China is very much a mar­riage of con­ve­nience. Rus­sia has the gas that China wants, with Rus­sia will­ingly ac­cept­ing all the as­so­ci­ated geopo­lit­i­cal ad­van­tages and the in­crease in its sta­tus.”

It also gives Rus­sia the abil­ity to play one mar­ket against the other, he said.

Putin said the 2014 gas-sup­ply con­tract with China was the big­gest agree­ment in the his­tory of Rus­sia’s gas in­dus­try.

The pipe­line posed an en­gi­neer­ing chal­lenge, travers­ing swamps, rocky moun­tains, ar­eas prone to earth­quakes and re­gions of per­mafrost where the tem­per­a­ture fell to mi­nus-50 de­grees Cel­sius (mi­nus-58 de­grees Fahren­heit) last win­ter.

“De­liv­er­ies of Rus­sian gas to China by pipe­line will raise Rus­sian- Chi­nese strate­gic en­ergy co­op­er­a­tion to a qual­i­ta­tively new level and bring the goal of in­creas­ing bi­lat­eral trade turnover to $200 bil­lion in 2024 closer to be­ing re­al­ized,” Putin said, speak­ing in Sochi, Rus­sia. “More than a tril­lion cu­bic me­ters of gas will be de­liv­ered to China through the Power of Siberia pipe­line over 20 years.”

Xi said the pipe­line was a mile­stone in en­ergy co­op­er­a­tion that un­der­scored the deep in­te­gra­tion be­tween the two coun­tries. He also hosted Niko­lai Pa­tru­shev, head of the Rus­sian Se­cu­rity Coun­cil, at the Great Hall of the Peo­ple in Beijing on Mon­day, say­ing that Beijing and Mos­cow would stand to­gether against in­ter­fer­ence from Wash­ing­ton and oth­ers.

“This year the United States and some other Western coun­tries have in­creased their in­ter­fer­ence in the in­ter­nal af­fairs of China and Rus­sia, threat­ened the sov­er­eign se­cu­rity of the two coun­tries, and im­peded their eco­nomic and so­cial de­vel­op­ment,” Xi said, ac­cord­ing to the of­fi­cial Xin­hua News Agency. He warned that such an ap­proach would only harm those na­tions.

“The deal is a sym­bol of Putin’s pivot to China. In the longer term, cheap pipe­line gas from Rus­sia will be in com­pe­ti­tion with Amer­i­can gas.” Alexan­der Gabuev, an an­a­lyst on China-rus­sia re­la­tions at the Carnegie Mos­cow Cen­ter

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