Updated at 9:35 a.m. ET
Beijing and Moscow reached a long-awaited natural gas deal Wednesday that would supply hundreds of billions of dollars of Siberian gas to China, Chinese media reported, as Russian President Vladimir Putin seeks reorients his gas sales toward the East.
A $400-billion deal for a 30-year supply of natural gas has been negotiated for nearly a decade, with Russia hesitant to concede a lower price for China than its European customers, the New York Times reports. Russia would invest $55 billion in infrastructure for transporting the gas to China, Gazprom CEO Alexei B. Miller said.
The contract is for 38 billion cubic meters of gas each year, the Wall Street Journal reports, implying a price of about $350 per thousand cubic meter—at the low end of what Gazprom currently charges clients.
“Russia needs this China deal very badly because it needs to signal to [Brussels] and to some EU nations that it’s taking a step that’s economically profitable and that it’s found a new market for its gas,” said Shamil Yenikeyeff, a research fellow at the Oxford Institute for Energy Studies.
Putin has sought to sell gas in China and diversify out of stagnant European markets, particularly now in the face of sanctions and political tensions in the West. Experts said Putin’s meetings with German chancellor Angela Merkel and President Obama in June were a key motivator in completing a deal with the Chinese.