Vladimir Putin has finally accelerated the signature of the Chino-Russian agreement concrning the gas, in order to conclude a discussion that had continued for a decade without a solution. The political differences of the Russia and China were set aside, to show the new feeling of friendship between the two countries. The Russian leader was by now demonstrating his capacity as a negotiator, and his really good feelings towards   China. In any case, signing an agreement with China  clearly demonstrated the new orientation  of the Russia, out of  the West , if not of  Europe, and in   friendly position to  the Chinese , who also had  a good  reason to  create a success .

A bad atmosphere had been developed with the smaller neighbours, some of which responded with violence to a move of China to drill for oil in a sea area claimed by another country. The agreement of the two countries has creates a huge common project to build an international pipeline to supply China with Russian gas. Total value of the agreement has been evaluated at 400 billion dollars.  Russia will  sell for thirty years to China 38 billion cubic meters of gas per year, which  is about 25% of the gas that Russia sell each year to Europe , an area  supplied  by three gas  pipelines , two on  land  and one under the sea.

The structure of the present agreement comes straight from the first Great Russian agreement with Europe: each country will build the pipelines in its own territory.  Russia will invest 55 billion dollars for the transport infrastructure, and China will lend to Russia 38 billion dollars   for these investments, including the full development of the producing fields. In a way, such an agreement was inevitable. There was no other possible consumer  of extra Russian gas , as Russia does not sell  liquefied natural gas  possibly  for a preference  to move  with great volume, and the  liquefaction technology is not cheap as that of pipeline.

Moreover, apart from Europe, China is the only great country that can receive gas travelling on land.  Finally the discount offered to China is quite relevant, for large volumes   compared with the European price, and the Chinese could not resist that. If one attempts to have a look to  the future , and if the European experience teaches  us something ,  its easy to say that the  success of the first pipeline will open  the door to  a second  one. The  energy needs of China  will not decline  , t will probably increase  quite steadily , and the gas pipeline is a  simple ,  relatively cheap  long standing structure ,and supplies  great quantities of gas  .The European example  is quite obvious :  the success of the first  pipeline brought  another  one and a third .

The Russia-China  agreement might  be quite an useful instrument  for inducing a  larger  use of gas,  a greater income for Russia , and a  more satisfying  and less polluting  energy structure  for China .The price of gas  has been addressed  only by Russian sources, repeating   the basic  Russian position : the gas price is based on the price of crude oil or of oil products in Europe .  This way of setting prices   has up to now brought the price of Russian gas above   the price of the gas coming to Europe by ship. The European buyers   therefore forced the Russian supplier to correct somewhat its position, in order to reduce losses on imported Russian gas. An expert calculation  of  Russian gas  would estimate the price  included in the agreement at 350 dollars per 100 cubic meters ,  slightly lower  than the European price  in  2013 , $ 380 per cm.

The problem of two possible prices for gas will of course be even more complex in China, a country that can import natural gas liquefied by ship from all over the world. The gas market might split in two parts, with different prices, which would not be   tenable for long. The Russo-Chinese project will satisfy quite a slice of the energy demand of China,   but will not prevent gas from other sources to get into the market. The American gas producers    intend to compete worldwide with their export of natural gas in liquid form, and will eventually find much harder to enter in large volumes on a Chinese market   already partly supplied.

However, the Russian pipeline will not satisfy all the Chinese demand for gas. The    basic concept  of the Russian gas industry , an oil-tied price, would  probably  not prevent the  America gas to enter  with  lower prices , in a sort of repetition of what happens to day in Europe, where pipe gas  does not compete efficiently with the shipped  gas  in liquid form . In conclusion,  an important agreement ,  presenting  an alignment of  two countries  who never  worked together , and in fact had periods of strong  hostilities. This new friendship  of two large countries   might represent an important change in the  political structure of our world , which might  lead to  a  more balanced   situation , and, one might hope ,  more interested in economic development  than the display of power.