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Page added on November 9, 2014
China, Russia sign second mega gas deal
China and Russia on Sunday signed new agreements to boost energy cooperation, including a deal to develop a second route to supply 30 billion of natural gas to the energy-hungry Communist giant.
Chinese President Xi Jinping and his Russian counterpart Vladimir Putin witnessed the signing of a series of bilateral cooperation agreements, including an MoU of the China-Russia West Route natural gas pipeline and a framework agreement between China National Petroleum Corporation, the country’s largest oil and gas producer, and Russia’s energy giant Gazprom, state-run Xinhua news agency reported.
Russia’s “western” or “Altay” route would supply 30 billion cubic meters (bcm) of gas a year to China, reports from the Russian media said.
The new supply line comes in addition to the “eastern” pipeline, which will annually deliver 38 bcm of gas to China.
Work on that pipeline route has already begun after a USD 400 billion deal was clinched in May this year.
Today’s agreement was signed coinciding with Putin’s visit to take part in the Asia Pacific Economic Cooperation (APEC) meeting beginning tomorrow.
The deal with China gives Russia a major boost at a time when Washington and the European Union have slapped sanctions on Moscow over the crisis in Ukraine.
The agreement give Russia a way to vastly expand its market for its gas, which now goes mostly to Europe. For China, the world’s second-largest economy, the cooperation helps ease gas shortages and curb its dependence on pollution causing coal.
Both Putin and Xi agreed to strengthen energy cooperation, saying that it is of great significance to safeguarding the two countries’ energy security.
“Regarding cooperation in the international sphere, the most important thing is cooperation between China and Russia to keep the world within the framework of international law, to make it more stable, more predictable,” Putin said.
“Together we have carefully taken care of the tree of Russian-Chinese relations. Now fall has set in, it’s harvest time,” Xi said.
The two countries have seen broader and closer feasible cooperation in new situation, according to the two leaders.
They agreed to push forward the construction of the east route gas pipeline as scheduled, launch the west route at an early date, negotiate major oil projects in an earnest manner, and discuss new cooperation projects of nuclear power and hydropower.
The two leaders also agreed to beef up cooperation in high-speed rail, high technology, aerospace and finance sectors.
Xi has held talks or met with Putin ten times since he assumed the office of Chinese presidency in March 2013.
29 Comments on "China, Russia sign second mega gas deal"
dissident on Sun, 9th Nov 2014 4:37 pm
Better than any counter sanctions. The EU will have to work hard to re-gear itself for LNG imports. Freedom from evil Russian clutches is near 🙂
MSN Fanboy on Sun, 9th Nov 2014 4:59 pm
There is a third one planned:
http://www.tonicmovies.com/en/popular/684/oil/1.html
Pipelines must be oiled.
peakyeast on Sun, 9th Nov 2014 5:18 pm
Looks like the MSN fanboy has discovered something new and obviously very exciting.
I am not sure I condone of such links.
GregT on Sun, 9th Nov 2014 5:29 pm
“For China, the world’s second-largest economy”
Not according to the IMF. When adjusted for PPP (purchasing power parity) the IMF announced that China has now overtaken the US as the world’s largest economy. These Russian/ Chinese trade deals are very bad for the petro-dollar. Expect more of the same.
http://www.businessinsider.com/china-overtakes-us-as-worlds-largest-economy-2014-10
JuanP on Sun, 9th Nov 2014 5:57 pm
Europeans are the big losers here. All that gas in Western Siberia could have gone to Europe, but now it never will. European governments do not have their people’s best interests at heart. I think Europe will crash economically and the euro will collapse before the dollar, buying some time for us in the USA.
I got soaked today while fishing on my raft, I hope I don’t catch a cold.
Makati1 on Sun, 9th Nov 2014 7:20 pm
dissadent, where is that LNG going to come from and when? Russia is planning to supply Japan and South Korea also in the near future. The East will be connected by energy pipelines and non-USD trade. Looking bad for the West.
Davy on Sun, 9th Nov 2014 7:40 pm
Greg said – Not according to the IMF. When adjusted for PPP (purchasing power parity) the IMF announced that China has now overtaken the US as the world’s largest economy.
Greg if you realistically look at the Chinese economy it is hollow. Add up the unrealized bad debt, mal investments, ecological destruction, human health deterioration, and an economy built on cheap exports.
I am not trying to talk up the US economy because we know those problems. They are continuously talked about on this site. China is being talk up with unrealistic optimism and admiration these days. China is not what it seems just like doing business in China is not what it seems.
So many western companies have been fleeced in China by fake accounting. China is a chameleon. Any animal that can change colors and look in two directions at once is strange and not normal.
Apneaman on Sun, 9th Nov 2014 7:57 pm
Davy,I googled “Fake accounting” and everything that came up was American.
Davy on Sun, 9th Nov 2014 8:05 pm
Sure Apnea at least Americans use accounting. It has taken many years for Chinese companies to be listed on western exchanges because of their lack of transparency. The whole society lacks transparency from the top down. The Americans and your Canadians are engaged in corruption and manipulation for sure but it is the legalized kind. IOW our laws are being gutted. In China it is an historic tradition.
Apneaman on Sun, 9th Nov 2014 8:58 pm
Our laws are being gutted by the owners of the companies themselves and plenty of it is illegal, like investment banks rigging markets and washing cartel drug money. No one has fucked more people than big capitalists. Soon there will be no difference between a Chinese peasant and a N. American one. The lives of 3-4 generations of white N. Americans were a historical anomaly only made possible by cheap & abundant energy and much sacrifice by the early 20th century labor movement( totally minimized/ written out of recent history) I guess, in many ways, I got lucky being born a white boy in Canada in the 1960s. Except for this dystopian ending part 🙁
Davy on Sun, 9th Nov 2014 9:03 pm
Apnea, the difference between a N. American peasant and the Chinese one will be primarily a difference based on which one has food and which doesn’t. The rest is immaterial.
rockman on Mon, 10th Nov 2014 6:40 am
d – “The EU will have to work hard to re-gear itself for LNG imports.” Not going to take any “work” per se. The EU could be importing all its NG from countries other then Russia today. All they had to do is invest 100’s of $billions in pipelines and LNG import terminals. And then compete with Asian buyers at a price several times higher then what the Russians have been charging them.
So no work at all…would just take writing some very big checks. But they chose economy over independence from Russia NG supplies. Their choice.
Davy on Mon, 10th Nov 2014 6:44 am
http://www.bloomberg.com/news/2014-11-10/bank-of-russia-cuts-2015-economic-forecast-to-show-no-growth.html
Good article on Russia. This paragraphs are interesting for us here:
The Bank of Russia said in Moscow today that gross domestic product will probably stagnate in 2015, highlighting the damage wrought by a slump in oil prices and international measures linked to the conflict in Ukraine. Governor Elvira Nabiullina said the ruble’s slide has gone too far and pledged to limit local-currency funding to ward off speculators.
Accused of stoking the conflict in Ukraine, President Vladimir Putin is struggling to shield the economy, which is growing at the slowest pace since a 2009 recession. The ruble has depreciated to record levels, while the Bank of Russia raised its net capital outflow forecast to $128 billion this year, double the $61 billion it reported for 2013.
Forecasting that sanctions will last through 2017 and oil will average $95 a barrel, the Bank of Russia cut growth in its main 2015 view to zero and pushed back its medium-term inflation target of 4 percent by one year from 2016, according to the revised three-year monetary policy plan that it published today.
There is a 70 percent chance the country may fall into a recession over the next 12 months, according to the median forecast of 27 economists surveyed by Bloomberg.
JuanP on Mon, 10th Nov 2014 11:00 am
Davy, I mostly agree with the data in that article. It was good, even if the analysis of the data was somewhat biased and distorted. I haven’t read one single article on Russia on Western MSM that is not biased this year.
I expect the Russian economy to stagnate next year, but the sanctions are becoming less effective every day. I expect Russia will lose billions with these sanctions, but it is growing stronger and more united than ever before. Russia and the Ruble will make it through, the European Union and the Euro, on the other hand, may not.
JuanP on Mon, 10th Nov 2014 11:13 am
China, Russia and most of the world continue increasing the use of bilateral deals using their currencies and creating their own financial institutions to bypass Western ones every day. Uruguay has just signed bilateral deals with China to use the Yuan in trading, the same thing is happening across Latin America. The BRICS are basically building an independent alternative financial system. This will prove very smart in hindsight, after the Western financial system crashes any day now.
http://rt.com/business/203903-ruble-yuan-dollar-settlements/
Davy on Mon, 10th Nov 2014 1:32 pm
Juan, the Brics are a mess so don’t get too excited. I am not impressed with any of them other than Brazil.
JuanP on Mon, 10th Nov 2014 2:27 pm
I don’t particularly care about the BRICS, not even Brazil. As an Uruguayan prepper I always considered my country’s neighbors, Brazil and Argentina to be Uruguay’s highest risk. If Uruguay was an island it would be an amazing place.
In my new Uruguayan farm, my biggest risk is a few million starving Brazilians crossing the border and advancing like locusts. My farm is less than 100 miles from Brazil, and people in the area shop in Brazil because it is way cheaper.
My house will be impenetrable without military equpment, built to resist Brazilian zombies. A monolithic basalt reinforced concrete structure covered in bricks on the outside to make it look more rustic and traditional. Two 25′ by 25′ floors for a perfectly insulated cubic passive 1,350 sqft house with a four sided clay tile roof, and with a 1,000 sqft uninsulated basalt reinforced concrete basement underground. I will also build a perimeter stone wall around the house since I only pay for the labor. I am not normal and it shows. 😉
Davy on Mon, 10th Nov 2014 2:47 pm
Juan, how is the gun situation in Uruguay? Can you get some decent arms and ammo?
JuanP on Mon, 10th Nov 2014 3:19 pm
Davy, Curious timing for your guns question because I just found out a couple of days ago that a gun collection is among the things I inherited from my mother’s father. I haven’t been to Uruguay since my grandpa died or read the docs or claimed my inheritance, so I didn’t know. The stuff is in storage waiting for me.
Most medium and large farms have a full set of hunting weapons and a couple of handguns at a minimum, but some people have more. Typically a farm has three double barreled shotguns in 12, 14, and 16 gauges, a single shot deer hunting rifle, a .22lr repeater rifle for jackrabbits which are a pest, and a larger caliber rifle for hunting wild boars which are a pest and cause a lot of damage. For handguns S&W revolvers and Beretta 9mm automatic pistols are the most common.
All these weapons have to be registered and permitted, and all gun and ammo sales have to be reported to the police in a form, and can be bought and sold freely.
No military grade weapons like AKs, machine guns, and such are allowed for civilians since the military dictatorship in the seventies. They were made illegal and people were forced to turn them in.
Criminals can buy whatever they want illegally in the black market, but they use knives, revolvers, and pistols, mostly, if they are armed at all. Criminals convicted of violent crimes are not allowed to legally own weapons, and posession of an unregistered gun is a felony for them, but only a misdemeanor for people with no criminal record.
There is not much gun violence in Uruguay compared to the USA, but petty crime and corruption are much worse in Uruguay, IMO, particularly in the capital. Crime is rampant in the capital at this time, far worse than ever before. The countryside, on the other hand, is extremely safe and peaceful.
GregT on Mon, 10th Nov 2014 3:21 pm
Juan,
I was quite surprised when I visited Mexico last fall. Many businesses there won’t even accept US dollars anymore. The Mexican government is cracking down on the flow of US dollars into the country in exchange for drugs. A different situation from the BRICS for sure, but a negative for the USD just the same. Eventually all of those FRNs are going to come back home to roost, and when they do there are going to be big problems stateside.
JuanP on Mon, 10th Nov 2014 3:40 pm
Greg, IMO, a future drastic devaluation of the dollar is inevitable.
I have lived with extreme devaluation and hyperinflation, after a difficult period of adjustment things usually settle on a new deteriorated normal. Most all savings are lost when it happens, sometimes overnight. You wake up one morning to hear on the radio that all your money is now worth half what it was last night or something like that. Normally, bank deposits are frozen at that moment and only small amounts can be withdrawn. Life becomes a mess.
That happenned once in Uruguay in my childhood, and I lived it in Argentina and Brazil, too, many times. Down there we are always going from one country to another on our shopping trips depending on who’s currency is more devalued. I shopped in Buenos Aires and Brazil regularly when I lived in Uruguay. It is very normal for the Uruguayan middle class because you save money even considering the travel expenses. For Argentina life is like that about half the time. 😉
GregT on Mon, 10th Nov 2014 3:54 pm
Here is a very good documentary on the collapse of Argentina in 2001:
http://www.youtube.com/watch?v=Zsqa-YHE36A.
I would highly recommend watching this for anybody that doesn’t believe how quickly things can, and do fall apart. It is my understanding that kidnapping and extortion are among Argentina’s biggest ‘industries’ now. Very sad how a country can go from riches to rags in such a short period of time.
Davy on Mon, 10th Nov 2014 4:01 pm
Juan, it may take time for that devlauation and when it comes “Katty bar the door”
http://www.zerohedge.com/news/2014-11-10/deflation-comes-knocking-door
Davy on Mon, 10th Nov 2014 4:05 pm
Greg, Argentina, will be like a church camp compared to what is coming in areas with religious, ethical, and national tensions. At least Argentinians are homogeneous and educated.
You are right about how quickly things fall apart in a modern societies when economic breakdown occurs.
GregT on Mon, 10th Nov 2014 4:15 pm
There was a very good thread started on Kitco.com back in 2011 titled “Deflation Precedes Hyperinflation-Long Answer”. The guy that started this thread was even interviewed on national television.
https://gold-forum.kitco.com/showthread.php?93752-Deflation-Precedes-Hyperinflation-Long-Answer
Well worth the read, whether you buy into his take or not, it is definitely worthy of consideration.
Yes Davy, and as I have stated so many times here before, the cities are not going to be very hospitable places after a big economic ‘hit’.
JuanP on Mon, 10th Nov 2014 6:16 pm
Davy, I expect the dollar’s devaluation to play out over decades, but it could happen faster. The process would have many cycles.
Argentina will be mostly OK, comparatively speaking, they will neither starve nor freeze to death. Argentina is already like 80% of the way down when you consider that it was the 7th largest economy in the world in 1917, and they have been falling for a century already. But at today’s level any additional losses become critical.
In general, I believe that most of the coming changes in all aspects of life will play out in cycles over decades, if we make it that long, barring some possible enormously catastrophic events. But there will be multiple intensive crises along the way.
JuanP on Mon, 10th Nov 2014 6:32 pm
Davy, the dollar’s increase in value relative to other currencies is not surprising. This is a repeat of people moving to dollars in times of crisis. I expect this to continue until some point in the future when it will stop.
As far as inflation and deflation goes, I expect some things to become more expensive and others less. Food, land, water, and energy will be more expensive. Stocks, bonds, urban real estate, and paper money will lose value.
Davy on Mon, 10th Nov 2014 7:23 pm
Juan said – In general, I believe that most of the coming changes in all aspects of life will play out in cycles over decades, if we make it that long, barring some possible enormously catastrophic events. But there will be multiple intensive crises along the way.
Juan, I am board with your above comment. I am not sure about the frequency of the cycles. It may start out swift and violent like a hurricane then become more subdued as complexity and energy intensity diminish. I do know degree and duration is important to these cycles. Species survival depend on the severity of the shock. This is very important to keep in mind when the next crisis gets here.
I see the first part of the descent paradigm in 2008. The next one this year or next. This most likely will be a financial collapse. Then shortly after an energy induced further collapse down. I just can’t imagine much more time left for our new normal BAU post 2008. It is corrupt, manipulated, and distorted. It is a state of debt entropy that cannot be repaired nor reversed. The damage has been done something new must be found.
Everything depends on confidence in the system we are in. It is a vast economic system that stretches around the globe. We are trading and exchanging with folks we don’t know. We don’t even understand their culture yet we trade and trust. When trust is gone there is little hope of globalism and the far flung production and distributions we find normal now.
I am sure trade will continue in some form. Trade is natural for humans even in primitive societies but what we have now is just not sustainable nor resilient. It is unhealthy for our species and our planet. How can something so wrong continue? It is only because of energy intensity that we are buying time and our energy intensity is falling quick.
JuanP on Mon, 10th Nov 2014 7:42 pm
I agree, Davy.