Vladimir Putin is well into his second and final day of a trip to China during which he was hoping to sign a long-sought gas deal with Beijing. There’s no sign of white smoke so far and if the Russian president leaves empty handed it would be a serious blow.
Gazprom has repeatedly said negotiations are in their final stages but it seems there has been no agreement yet on price and Moscow may have to lower its sights given the prospect of it losing business in Europe, which has been spooked into considering how to secure its energy needs elsewhere in future, has rather strengthened Beijing’s negotiating hand.
There has been a lot of talk in Russia about a pivot to the east but some analysts say that could never fully compensate for lost business with the West and if the China gas deal which could be worth $400 billion or more does not come to pass the strategy will look hollow. Late on Tuesday, a Putin spokesman said negotiators from both countries have been unable to bridge differences on price.
Expectations had run high that Putin’s China visit would seal a contract under which state-owned Gazprom would supply China National Petroleum Corp with 38 billion cubic meters of natural gas a year for 30 years.
It could be that something will be announced at Putin’s St. Petersburg economic forum later in the week but whether it is definitive remains to be seen.
How the deal, or lack of one, will shape Russia’s attitude to the West, particularly over Ukraine, is difficult to read. In the short-term, there are signs of conciliation with Putin saying he had ordered Russian forces massed on Ukraine’s border back to base and offering some rhetorical support to Sunday’s election of a new Ukrainian president.