It’s official. Big things are happening on the oil front in the East. Now, usually at Oil & Energy Daily, a big oil deal is good… maybe because there are no (potentially terrifying) strings attached. You see, Russia and China have become blood brothers… okay, maybe not quite yet, but they’re getting awfully cozy after signing a $400-billion natural gas supply deal. Frankly, the world is sitting on the edge of its seat, watching this eerie alliance form.
Talks about the deal have been going on for the past decade, but now that it’s alive and real, there’s no going back. Russia’s Vladimir Putin comments, “Russia and China have established an investment cooperation committee that will continue to push forward our cooperation in investments, as well as promote major business incentives in the energy sector.”
So what exactly does this deal encompass, and who’s going to be affected the most?
The business plan: Every year for 30 years, Russia will supply China with 38 billion cubic meters (bcm) of gas. The gas will be transported from Siberian gas fields directly to China’s main centers. So Russia gets more access to Asia, and China now has a market in Moscow. It’s a win-win for both. Again, a huge success in the oil industry, but for both countries, we know what’s at the root…
Money and Power
This is such an opportune time for both parties. Russia and the United States have never been “buddy buddy,” and China and the U.S. government are having major trust issues. So how ironic is it that two countries on the outs with America are forming such a huge deal together?
If you believe that alliances are all about holding hands and singing “Kumbaya,” you’re sadly mistaken. At the end of the day, forces join to maintain two crucial things: money and power. Russia is one of the world’s largest gas producers, and China is the largest consumer. It’s the perfect marriage for them, but an utter nightmare for everyone else, namely the United States.
At the end of the day, countries are nothing more than huge businesses. So you better believe: This new union will stick tight to protect the bottom line… by any means necessary.
And “the chase” continues,
Oil & Energy Daily Research