China's Alaska deal makes Russia shudder

Three Chinese state-run corporations signed an agreement with the government of the US State of Alaska on the production of liquefied natural gas on the territory of the state with its subsequent transportation to China. The contract is evaluated at 43 billion dollars.

Noteworthy, the deal is paid for by US securities - USA's "debt receipts" to China. Their holders are the Bank of China and the state fund of the PRC.

In a nutshell, the USA will give China shale gas as debt payment. It is clear now why the Chinese have decided not to sign new gas contracts with Russia.

Representatives for the Chinese administration said that they did not see the need for the Power of Siberia-2 gas pipeline (with a capacity of 30 billion cubic meters per year), nor does China need the pipeline to deliver natural gas from Sakhalin Island (8 billion cubic meters per year), even though Russia and China were discussing these projects for the last two years.

Professor of the Russian State University of Oil and Gas named after I.M. Gubkin, Valery Bessel, said in an interview with Pravda.Ru that the contract with the Americans and the refusal to implement new projects with Russia was a "normal business process," in which there is nothing to worry about. China and the USA are major trade partners, and a contract worth 43 million dollars is simply not serious from the point of view of the scale of the US-Chinese turnover.

"Russia needs to follow China's example and start building normal relations with the Chinese. We could, for example, offer China to develop Russian natural gas deposits and build pipelines together," the expert said.

China's needs for gas are so great that the country is ready to cooperate with both Russia and the USA at the same time.

"China's market is huge - it goes about the maximum figure of 3 trillion cubic meters of gas per year, which is unreal, of course, because the world produces only 3-4 trillion cubic meters of gas a year, but this is the amount of gas that the country needs," the expert said.

China accounts for 50 percent of the world consumption of coal, the burning of which releases enormous amounts of ash, and Beijing hopes to solve this problem by changing the balance in favour of gas. Therefore, Chine concludes gas contracts with everyone, the expert believes.

As for pipelines, Russia is China's only partner, plus the Turkmen gas from the West.

As for liquefied natural gas, it is profitable for China to receive this fuel from many regions of the world. There are supplies from Australia and Qatar, and now China will start receiving liquified natural gas from Alaska. China works with Russia on liquefied gas too - this is the Yamal LNG project, but the Chinese will expand their participation in the project and start investing in it only if it proves effective. "For the time being, we cannot offer them anything," the expert said.

"We need to work very seriously to create our image of a reliable partner who will not rush from revolution to revolution. This is what Russia has been doing lately, but it takes time," Bessel said.

If Russia develops projects that can engage the interest of the Chinese, they will be willing to invest in them.

"It is an open secret that China does not take any political positions - the country is primarily interested in internal development, plus the development of the region where it is located. The Chinese do not play political games," the expert told Pravda.Ru.

"Do you remember what Mr. Chubais said once about communism? He said that Russia hammered the last nail into the casket of communism. What do you think Chinese communists think of present-day Russia? They are being cautious," Valery Bessel said.

The expert believes that Russia should learn from China. "Unlike Russia that has experienced two revolutions over the past hundred years, China has been developing peacefully for five thousand years without any revolutions," said the expert. "The Chinese have shown Russia where the communist China is and where the free market Russia is. China's  GDP in 2016 was 21.4 trillion dollars, and Russia's 3.4 trillion. In 1991, when we started "hammering nails into the casket of communism," Russia's GDP was slightly higher than that of China," he concluded.


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Author`s name Dmitry Sudakov