Inside the Sino-Russian natural gas negotiations: the final negotiations are still in the morning at 4 o'clock in the morning

"Putin hopes to reach this agreement before leaving, even at the last minute.

On May 21, a few hours before leaving Shanghai to return to Moscow, Russian President Putin attended the signing ceremony with Chinese President Xi Jinping.

"Putin hopes to reach this agreement before he leaves, even at the last minute.

According to Russian media reports, China and Russia had been negotiating for the past two days.

"This is a difficult negotiation.

The Sino-Russian Eastern Route Gas Purchase and Sale Contract signed by PetroChina and Gazprom agreed that starting from 2018, Russia will begin to supply gas to China through the Eastern Route of the Sino-Russian Natural Gas Pipeline, and the gas transmission volume will increase year by year, eventually reaching 38 billion cubic meters per year.

"This is the result of the efforts of many parties.

China sticks to the bottom line

"First, you cannot treat Asia according to European prices; second, you must consider the acceptance of the Chinese market.

On the day before the signing, the British "Financial Times" quoted PetroChina spokesperson Mao Zefeng as saying: "We will not sign an agreement.

A colleague of Mao Zefeng revealed to China Economic Weekly that after the signing of the China-Russia contract, he asked Mao Zefeng about this matter, what's the matter? Mao responded that the media had misunderstood his meaning, but Mao did not provide any further explanation.

However, PetroChina's natural gas import business has indeed been losing money, and it has almost become one of the biggest burdens that drag down PetroChina's performance.

In previous negotiations, Russia has always hoped that natural gas exported to China will be calculated at a price of up to US$400 per thousand cubic meters in Europe, while China hopes to negotiate with reference to the price of US$235 per thousand cubic meters in Central Asia.

The price issue has therefore become the biggest obstacle in the negotiation between the two parties.

Insiders revealed to China Economic Weekly that the negotiations that lasted until 4 a.
m.
on May 21 have always revolved around price issues.
"Of course, there is still a gap between the final negotiated price and our wishes.
But we stuck to our bottom line and did not reach the bottom line to avoid negotiation.
" He said that the bottom line in many aspects, the Chinese side persisted to the last moment.

The "bottom line" he refers to includes: first, you cannot treat Asia according to European prices; second, you must consider the acceptance of the Chinese market, and China is sticking to its own bottom line of prices.
"This is not just said now, but it was told to Russia a few years ago.
"

Insiders told China Economic Weekly that overall this is an ideal agreement, and Russia has made many concessions.

Four days after the agreement was signed, Putin said with a smile when meeting with Chinese Vice President Li Yuanchao in Moscow: "All colleagues in your government should be given due evaluation.
They'drank a lot of our blood' in the negotiation-the Chinese are very remarkable.
Negotiator.
"

"But their (Russian) asking price was originally too high, or even unrealistically high.
At the highest price, they quoted 500 US dollars per thousand cubic meters, which is higher than the price sold to Europe.
" Insiders said, The Chinese negotiators have been working hard to do the work on the Russian side to promote how Russia can correctly view China’s market issues, and the Russian side is also promoting it, and they are becoming more pragmatic.

"They have made many adjustments to the original negotiation method, and have a very realistic consideration of the Asia-Pacific market, which is more in line with the characteristics of the Asia-Pacific market, especially the Chinese market, and the final price is getting closer and closer to the bottom line of our negotiations.
" People believe that Russia’s original thinking is to use European market prices in the Asia-Pacific market, which is unrealistic.
"It turns out that this road is unworkable, and they have become more and more pragmatic.
"

However, the final "bottom line price" was not announced by both parties.
"This is a very sensitive issue.
As soon as Russia's prices are announced, some of the prices that the two sides have signed with other countries will have some impact and impact.
This is a kind of pressure on both sides.
"

Xing Guangcheng said that he learned from the report of the Russian Kommersant that a price range disclosed by the Russian side was "approximately higher than 350 US dollars per thousand cubic meters and less than 400 US dollars per thousand cubic meters.
" 400 US dollars per thousand.
Cubic meters, this is the price signed between Russia and EU countries.
Xing Guangcheng estimates that the negotiated price will not be higher than the price in the European market.
"Russians are good at revealing news.
This contract is not entirely a matter between China and Russia.
Russia has to negotiate with Europe, which may provide it with room for maneuver.
"

On May 28, 2013, the Mare Region of Turkmenistan, a natural gas processing plant that is about to put into operation to deliver natural gas to China.
CFP

Russian pressure

Ukraine problem, long-term idle resources in eastern Russia, European natural gas market volume and price decline, North American natural gas will be exported

Most analysts believe that after the completion of gas negotiations with China, Russia can take a tougher attitude to deal with the situation in Ukraine and European sanctions.
This is the actual political interest considered by Russia, and it is also the main purpose of Russia's efforts to promote the agreement.

In Europe, Russia is facing sanctions because of the Ukraine crisis.

Europe is the largest market for Russia's natural gas supply, and Russia's natural gas supply accounts for nearly one-third of the EU's energy demand.
Before the Ukraine crisis, EU countries were already looking for multi-channel energy supply to reduce their dependence on Russia.
After Crimea declared its independence, conflicts between Russia and the European Union intensified.

Russia must get rid of this situation and open up new markets outside of Europe.
This is Russia's strategic consideration.
This provides a breakthrough for the long-standing stalemate between China and Russia.

"Russia didn't care about this negotiation, but now this negotiation is very important to Russia.
He has to care about it.
This is a special change in the political climate.
" Yuan Gangming, a researcher at the Center for China and World Economics of Tsinghua University, accepted the "Chinese Economy In an interview with The Weekly, the talks were therefore insignificant.

Politically, timing is too important.
"The Ukrainian issue is a factor that has triggered Russia to make some concessions.
This stimulating factor now seems to be unavoidable.
" Insiders analyzed that changes in the political climate have forced Russia to reach an agreement with China as soon as possible, and take more realistic actions as soon as possible.
attitude.
"Including major concessions to get closer to our prices.
"

However, before 2007, although Chinese negotiators had been going to Russia to try to negotiate with the Russian side, the Russian side was unwilling to talk.
Yuan Gangming said, “Russia has run aground and talks cannot be reached.
China will negotiate with Central Asia instead.
”

In 2007, when the two sides were at a deadlock, China's negotiations in Central Asia made a major breakthrough.
PetroChina and Turkmenistan have signed an annual purchase and sale agreement of 30 billion cubic meters of natural gas at a relatively low price.
The Second West-East Gas Pipeline began introducing natural gas from Turkmenistan in December 2009.

"This really puts a lot of pressure on Russia, and it also makes it more and more passive in subsequent negotiations.
" Insiders analyzed that Russia's pressure is far more than that, and negotiations with China have been unable to negotiate for more than 10 years.
, The resources in eastern Russia have not been developed; prices in the European market are falling, while demand is falling; and natural gas in the North American market will be exported, all of which have put a certain pressure on Russia.
It is predicted that from 2018 to 2022, the entire natural gas market structure will undergo major changes.
"Supply will be more diversified, competition will be fiercer, and downward pressure on natural gas prices will be greater.
The changes in the overall natural gas market structure will also be a huge pressure on Russia.
"

From this perspective, the current contract is also a good time for Russia.
"In any case, this is a win-win solution.
Russia has obtained a huge Chinese market, and we have obtained a stable and diversified competitive gas source to improve our energy structure.
" Yuan Gangming gave a very high evaluation.

"Of course, it will also bring some problems to a certain extent, that is, the pressure of CNPC's natural gas losses will further increase, which will also help force the domestic natural gas pricing mechanism reform and related tax and fee reforms.
" Insiders explained.
.

20 years at the negotiating table

From Putin to Miller, Russia’s main negotiators have never changed.
They can discuss very specific issues with PetroChina, or they can discuss strategic issues from the highest-level perspective.

On the day of the signing, Xinhua News Agency issued a press release stating that the Sino-Russian East Route natural gas cooperation was realized under the personal care and promotion of the leaders of China and Russia, under the direct guidance and participation of the governments of the two countries, and under the long-term joint efforts of the enterprises of both sides.
.

After China and Russia signed the contract, Putin also emphasized: "I don't think that if he (Xi Jinping) personally took care of some important matters in the negotiation, we might not be able to make these decisions.
"

Statistics show that as early as 1994, China and Russia signed a memorandum of understanding for the construction of natural gas pipelines.
In fact, since 2004, almost every high-level meeting between Chinese and Russian leaders has talked about Sino-Russian gas negotiations.

The cooperation in natural gas energy is not only a commercial cooperation, but a strategic cooperation, which has been promoted under the attention and guidance of several Chinese and Russian leaders.

During these 20 years, China has experienced three generations of central leaders: Jiang Zemin, Hu Jintao, and Xi Jinping.
An insider said: "The three generations of leaders are very aware of this project.
Every summit between China and Russia will involve energy issues.
The key issues and trends in energy are all guided by the highest level.
Of course, they They will also listen carefully to the opinions of energy companies, and finally promote bilateral cooperation.
"

Negotiations in the past 20 years have been long and short for a strategic project, but for the negotiators of the project, it is enough to turn it from "black hair to white hair".

This long period of time spans the first term of President Putin, the term of prime minister, and the second term of his president.
"Putin knows the whole negotiation process very well, and is also very clear about every detail in this natural gas negotiation.
" In the eyes of insiders, the second term of the president is a high point in Putin's life.
"In his strategy, he hopes to have a major advancement in relations with China, not a small advancement.
He also needs a major advancement.
"

However, due to price issues, negotiations have been deadlocked in the past few years.
"Especially in recent years, the main contradiction has occurred on the Russian side.
" An insider told China Economic Weekly, "After Putin became president for the second time, he has been ruthlessly Criticized the executives of Gazprom, saying that he is too unrealistic and that he would lose the Chinese market.
"

After the Ukrainian crisis, the Russian side is in a very urgent mood to advance the negotiations.

According to insiders, during so many years of negotiations, Russia’s main negotiators have never changed, from Putin to the current CEO of Gazprom Miller.
"They know the details of the negotiations between China and Russia very well.
At the negotiating table, they can discuss very specific issues with PetroChina, even very detailed issues, and they can also discuss strategic issues from the highest level of perspective.
"

In the past 20 years, “although the main negotiators in our country will change, in the negotiation process, judging from the specific details, there is a certain degree of disparity between the two sides, but the core negotiating experts have not changed.
They have been negotiating and negotiating with Russia.
After so many years, I have a very good understanding of the situation in Russia.
"

In an interview with the media, a Russian person said that Chinese friends are "difficult" and are very strong negotiating opponents.
"Of course, we must also consider the other party's ability to withstand, and when necessary, we must also make some concessions.
Borrowing Russian words, we'drank some of his blood', but we must not drink too much.
" The insider said, The decision-making that the country’s top leaders participate in considers far more than just issues of commercial interests, but issues of overall national interests.
"He will stand on a higher level and look at this issue in the longer term.
"

Insiders reminded that although the agreement was signed, it does not mean that there is no strategic difference between the two countries, which is still very obvious.
"Because between the two countries, the two systems and the two cultures, the overall national strategies and national interests of the two countries are also inconsistent.
Correctly understanding and managing the differences is a very critical point for the future and a test of the highest wisdom of both parties.
A performance.
"

Foreign media sees "400 billion large orders"

Russian weekly magazine "Power"

The Sino-Russian natural gas deal can be called the "longest undecided" project in the history of bilateral relations.
The signing of this contract enabled China and Russia to successfully forge an unprecedented "Moscow-Beijing Energy Alliance".

British "Financial Times"

For Xi Jinping, this agreement provides another source of natural gas supply for the Chinese economy, which is in desperate need of resources.
For Putin, the signing of this agreement allowed him to confidently say to the international community and the Russian people that he has a powerful new ally in the East.

Reuters

The signing of the agreement was a political victory for Putin.

Associated Press

China has signed a long-awaited 30-year agreement, which is an encouragement to Putin, who has been isolated diplomatically, both financially and diplomatically.

Agence France-Presse

The delivery of natural gas to China will not reduce Russia’s dependence on selling natural gas to the West, nor will it lead to a shortage of natural gas supply in Europe.
The importance of the agreement is largely symbolic, and the benefits to the Russian economy may be smaller than most people think.