Russia has agreed to supply China with natural gas for 30 years from 2018 under a long-awaited deal struck Wednesday.
The two sides had been working on a deal for a decade, but the agreement has gained significance with Europe looking to reduce its dependence on Russian gas as relations with Moscow sour over the crisis in Ukraine. Under the deal, Gazprom will supply 38 billion cubic meters of gas to China each year, with the possibility of increasing shipments to 60 billion cubic meters per year. That is equivalent to about 10% of Gazprom’s annual gas sales of 477 billion cubic meters to domestic and international customers. Revenue from those sales totaled $93 billion last year. The Russian Ministry of Energy declined to comment on the price China will pay for the gas, but they had originally been looking to charge $456 billion over the 30 year term. Price had been the main sticking point ahead of the agreement.