Gazprom a major Russian energy corp is looking to finalize a 30 year gas contract with China that entitles it to buy one billion cubic meters of Russian gas a year.China is looking to buy gas cheaper than other countries that Gazprom sells to since it offers an entrance into the Asian markets. Furthermore, Gazprom would be willing to sell gas at a lower price because the demand has fallen in europe while China is quickly becoming one of the world biggest consumers. Export of the Russian Gas to Chinese soil will begin in 2015 once the deal is finalized.
I'm glad to see how a company like Gazprom is taking advantage of a new market by offering lower prices to gain access. Once this deal is finalized the amount of Russian gas that China will consume will be higher of than those of Gazprom's other markets, so instead of selling gas at a higher price to fewer consumers they are selling at a lower price to a much wider consumer range. I think this move is one that is necessary for businesses of this magnitude to develop and continue to make profit. China will soon come to par with the United States in gas and energy consumption and Gazprom will be there to supply its energy needs.
-Jaisukh Samaha
http://online.wsj.com/article/SB10001424052748704116004575521433569135028.html?mod=WSJ_Energy_leftHeadlines
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