Already, Russia commands about 38.7% of Europe’s natural gas market, but it has been hard at work extending its economic influence in Europe and Asia. With almost 60% of Russia’s exports from natural gas, Vladimir Putin is taking steps to ensure that the cost of enforcing economic sanctions on his nation will hurt the sanctioning countries more than Russia itself.
In April, The Moscow Times reported that Gazprom, Russia’s state-owned gas business, purchased Kyrgyzgaz. The deal gives Russia a place in the Turkmenistan-China natural gas pipeline which is expected to be completed in 2016. That same month, Reuters said that Russia wrote off 90% of North Korea’s debt from the Soviet Union era in exchange for a protected pipeline and railway through North Korea to South Korea, and Royal Dutch Shell (ticker: RDS.B) reassured Russia that issues in Ukraine would not prevent the business operations.
In May, Russia officially approved a $400 billion deal to supply 38 billion cubic meters of natural gas to China by pipleline, following 10 years of negotiations. Business Vancouver says “While this is only a quarter of the gas Russia now sells to Europe, China’s growing appetite for natural gas is expected to quickly rise after the pipeline becomes operational in 2018.” Oil and gas expert Dr. Kent Moors said that demand for gas in China will not rise enough to make up for the huge excess China will be forced to buy from Russia each month. Thus, China might not commit entirely to the pipeline after all.
The local Indian Defense said that Russia also has plans to make a $30 billion oil pipeline that passes through northwest China to India. Reuters said that the Chinese deal encouraged Japanese lawmakers to lobby Japanese Prime Minister Shinzo Abe to sign a $6 billion pipeline with Russia. However, it seems more likely that Russia will ship LNG to Japan, since China will probably not allow a Japanese pipeline to connect to China’s infrastructure with Russia.
According to Israel’s YNet News, Russia’s sudden expansion raises concerns in Israel about Russian relations with Turkey. Israel fears that its discussions with Turkey to build a pipeline will be blocked or possibly even be replaced by Russia.
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