Analysis: If gas from Russia is not needed in China, why then are we offered $235 for it?

Beijing has a quite reasonable requirement - the cheaper the better. But  Gazprom is trying to protect themselves, by getting $ 25 billion in advance. To have a liquidity cushion in case CNPC  underpays, as it is happening now in oil supply sphere through East Siberia-Pacific Ocean, perhaps in this situation  our governments should postpone signing the final contract and change the dates of the delivery start, said the head of the analytical department of the investment company "Univer Capital" D. Alexandrov .But there is a risk that in a few years the situation will change quite unpredictably. I do not want to predict the cost of gas in five years, because the growth in demand provokes the introduction of capacities on liquefying gas and on the production of shale methane. I do not exclude that the price of fuel will probably end up being  lower than the present.

 But perhaps the Russian natural gas is in great necessity in Beijing.  And the creation of artful illusion of its own ability to supply gas is a thin stroke of the Eastern diplomacy. I'm not inclined to share the common stereotype that China does not need our gas, said the head of National Energy Security Fund K.Simonov . If the gas is not needed, then why are we offered $ 235 for it? It's more expensive than the gas they buy from Turkmenistan. Why would they be so good to us? The whole fuel balance of China is built on the tremendous increase in mine gas production in the country. It's unrealistic, he said. China also can get liquefied natural gas from Australia and Qatar, the analyst added.  But  besides China,  Korea, Japan and other countries will increase natural gas consumption.  If all this is taken into account, we find that the Chinese are trying by all means to settle in our minds the illusion of its own supply of fuel.

 In this situation Russia is the best option for China . And should bow to Beijing in order to stake out their  market? If they do not want to take, we need to sell East Siberian gas to other markets and even more expensive. We're in no hurry. We quickly signed the contract on oil supplies through the East Siberia-Pacific Ocean and now China is trying to fight out at least a dollar in their favor.  If we are patient in gas negotiations, the concession on the part of China is just a matter of time, said K.Simonov.

Source: http://www.oilru.com/news/265576/

Translated by: Anastasia Edrenkina