Petrodollar Alert: Putin Prepares To Announce "Holy Grail" Gas Deal With China

[Cap]

Petrodollar Alert: Putin Prepares To Announce "Holy Grail" Gas Deal With China

If it was the intent of the West to bring Russia and China together - one a natural resource (if "somewhat" corrupt) superpower and the other a fixed capital / labor output (if "somewhat" capital misallocating and credit bubbleicious) powerhouse - in the process marginalizing the dollar and encouraging Ruble and Renminbi bilateral trade, then things are surely "going according to plan."

For now there have been no major developments as a result of the shift in the geopolitical axis that has seen global US influence, away from the Group of 7 (most insolvent nations) of course, decline precipitously in the aftermath of the bungled Syrian intervention attempt and the bloodless Russian annexation of Crimea, but that will soon change. Because while the west is focused on day to day developments in Ukraine, and how to halt Russian expansion through appeasement (hardly a winning tactic as events in the 1930s demonstrated), Russia is once again thinking 3 steps ahead... and quite a few steps east.

While Europe is furiously scrambling to find alternative sources of energy should Gazprom pull the plug on natgas exports to Germany and Europe (the imminent surge in Ukraine gas prices by 40% is probably the best indication of what the outcome would be), Russia is preparing the announcement of the "Holy Grail" energy deal with none other than China, a move which would send geopolitical shockwaves around the world and bind the two nations in a commodity-backed axis. One which, as some especially on these pages, have suggested would lay the groundwork for a new joint, commodity-backed reserve currency that bypasses the dollar, something which Russia implied moments ago when its finance minister Siluanov said that Russia may refrain from foreign borrowing this year. Translated: bypass western purchases of Russian debt, funded by Chinese purchases of US Treasurys, and go straight to the source.

Here is what will likely happen next, as explained by Reuters [20]:


Igor Sechin gathered media in Tokyo the next day to warn Western governments that more sanctions over Moscow's seizure of the Black Sea peninsula from Ukraine would be counter-productive.

The underlying message from the head of Russia's biggest oil company, Rosneft, was clear: If Europe and the United States isolate Russia, Moscow will look East for new business, energy deals, military contracts and political alliances.

The Holy Grail for Moscow is a natural gas supply deal with China that is apparently now close after years of negotiations. If it can be signed when Putin visits China in May, he will be able to hold it up to show that global power has shifted eastwards and he does not need the West.



More details on the revelation of said "Holy Grail":

http://www.zerohedge.com/news/2014-...n-prepares-announce-holy-grail-gas-deal-china

 

[Cap]

More from the article:

To summarize: while the biggest geopolitical tectonic shift since the cold war accelerates with the inevitable firming of the "Asian axis", the west monetizes its debt, revels in the paper wealth created from an all time high manipulated stock market while at the same time trying to explain why 6.5% unemployment is really indicative of a weak economy, blames the weather for every disappointing economic data point, and every single person is transfixed with finding a missing airplane.

 

[Origanalist]

"Transforming America".

Maybe the days of China financing our foreign "adventures" are coming to a end?

 

[Zippyjuan]

They have been working on a gas deal with China for the last 15 years- this is not in responce to the current situation.

http://www.bloomberg.com/news/2014-...al-gas-deal-delayed-to-putin-s-may-visit.html

OAO Gazprom, Russia’s natural gas exporter, failed to seal a 30-year natural gas supply accord with China today, shifting the window for a deal to President Vladimir Putin’s planned trip to the Asian country in May.

The companies are considering preparing a contract in time for the visit, the Moscow-based company said in an e-mailed statement today after Chief Executive Officer Alexey Miller met with China National Petroleum Corp. Chairman Zhou Jiping in Beijing. Miller had earlier said a deal would be clinched by the Chinese New Year.

The Russian exporter has sought a breakthrough in talks on building a pipeline to China, the world’s biggest energy consumer, for more than 15 years. The state-controlled companies signed the first framework accord in 1997, with talks stalling since over prices.

Gazprom shares reversed gains of as much as 2.3 percent after the statement, trading little changed at 145.66 rubles by 5:49 p.m. in Moscow.

“We expect the contract to be signed in the course of 2014,” Ronald Smith, an oil and gas analyst at Citigroup Inc. in Moscow said by e-mail. “We continue to list the China contract as one of the three key catalysts for Gazprom in 2014.”

Then it will take years to build the pipeline and start any gas flowing East- if a deal is ever finalized.

 

[acptulsa]

They have been working on a gas deal with China for the last 15 years- this is not in responce to the current situation.

Doesn't mean we aren't driving them to work things out, speed things up, and add modifications like a serious challenge to the petrodollar.

Then it will take years to build the pipeline and start any gas flowing East- if a deal is ever finalized.

Yeah, but how many years? Not many at all, if we piss Putin off enough--and force his hand with sanctions.

 

[Zippyjuan]

The initial estimate (according to the article I linked which is from January of this year- the deal was intended to be in place for Putin's scheduled to visit China in May) was to sign a contract this year and start delivery as soon as 2018.

 

[ClydeCoulter]

@Zippy,
You've been here a while. Do you realize that 2014 to 2018 is less time than you've been on the forum?
2018 is just around the corner, about the length of time I've been signed up on the forum.

 

[Zippyjuan]

'Bout as long as a Presidential Term- which can sometimes seem mighty long. And that's if they hurry on it. In Russia, things always seem to take twice as long and cost three as much as they said it would for some reason.

 

[Origanalist]

'Bout as long as a Presidential Term- which can sometimes seem mighty long. And that's if they hurry on it. In Russia, things always seem to take twice as long and cost three as much as they said it would for some reason.

In Russia? Of course, that never happens here.

And this point is ignoring this part of the article I posted.

One which, as some especially on these pages, have suggested would lay the groundwork for a new joint, commodity-backed reserve currency that bypasses the dollar, something which Russia implied moments ago when its finance minister Siluanov said that Russia may refrain from foreign borrowing this year. Translated: bypass western purchases of Russian debt, funded by Chinese purchases of US Treasurys, and go straight to the source.

 

[Cap]

Like it or not, the game of Jenga that the FED has been playing is now coming quickly to a head. Just like the game, it's only a matter of time before the whole thing collapses. Try to not be underneath it when it does.

 

[Zippyjuan]

In Russia? Of course, that never happens here.

And this point is ignoring this part of the article I posted.

One which, as some especially on these pages, have suggested would lay the groundwork for a new joint, commodity-backed reserve currency that bypasses the dollar, something which Russia implied moments ago when its finance minister Siluanov said that Russia may refrain from foreign borrowing this year. Translated: bypass western purchases of Russian debt, funded by Chinese purchases of US Treasurys, and go straight to the source.

I have seen no indications that Russia or any other country was considering seeking a commodity backed currency. I don't see how that could possibly be inferred from a comment that Russia hoped to not borrow any money from foreigners in a year. That is a budget deficit issue- not a type of currency issue. If they do go to a commodity backed currency, they risk losing some of that commodity when they run a foreign deficit (which was why Nixon closed the Gold Window in 1972- to avoid losing more gold).

http://www.tradingeconomics.com/russia/external-debt

Russia External Debt

External Debt in Russia increased to 732 USD Billion in the fourth quarter of 2013 from 719.60 USD Billion in the third quarter of 2013. External Debt in Russia is reported by the Central Bank of Russia. From 2011 until 2013, Russia External Debt averaged 637.1 USD Billion reaching an all time high of 732.0 USD Billion in December of 2013 and a record low of 545.4 USD Billion in December of 2011. In Russia, external debt is a part of the total debt that is owed to creditors outside the country.

What the Minister may have been ACTUALLY saying is that they might decide not pay any of their foreign held debt this year.