- Russia and China agreed to a second gas deal this month. This time, it is for the same supplies that flow towards Europe.
- Together with the decline in natural gas production in the North Sea, a potential loss of Russian gas volumes could cause a one third drop in current EU supplies.
- Russia’s shift towards the East will shift the main LNG market to Europe, which is not economically as prepared to deal with the higher prices, hurting Europe and LNG exporters.
Only a few months ago, we witnessed a huge $400 billion gas deal signed between Russia and China. Western media largely greeted the deal with some partisan dishonesty, falsely claiming that Russia was taken advantage of by China, despite the fact that most indications are that China agreed to pay a similar price of around $360 per 1,000 cm as the EU currently does, with the price fluctuating in tandem with oil prices. Now we have news about another deal that I warned about in an article in September, which has the potential to pit the EU against China for the same Western Siberian gas supplies. Back then it was just talk about a deal in November with unspecified details, while now we are presented with the reality of a deal having been agreed to for 30 billion cubic meters per year in addition to the 38 billion cubic meters agreed to in the previous deal.
It is news that very few people paid attention to, despite the dramatic long-term effects this will have on Europe’s already struggling economy. Even as the deal was made public, there has been very little reaction. Very few people in Europe are jumping to launch a public debate about its ramifications. It is as if it does not matter, even though it matters greatly.
[Please click below to continue reading]
Continue reading Second Russia-China Gas Deal: EU Left With Expensive LNG, And LNG Left With A Sick Customer, by Zoltan Ban