Beijing, March 22:

China and Russia have vastly different reasons for agreeing their major gas deal, with Beijing looking to simply secure supply while Moscow pursues more strategic interests, analysts said today.

With Russian president Vladimir Putin in Beijing, the two nations signed an agreement yesterday to pursue two pipeline projects that would supply China with 80 billion cubic metres of gas annually by 2011. Analysts said many major obstacles were still to be overcome before Russian gas was actually piped into China and that the five-year long timeframe appeared ambitious, citing long delays in previous bilateral energy projects.

Nevertheless, Dave Ernsberger, the Singapore-based Asian director for energy consultancy firm Platts, said the agreement was an important step for Beijing in its long-term energy strategy. With 1.3 billion people and the world’s fastest growing major economy, China’s efforts to secure more energy sources from around the globe are already well documented.

Another important part of China’s plans, according to Ernsberger, was to increase consumption of gas and reduce its over-reliance on coal, a major cause of pollution. “China is pretty much the only major country in the world where gas doesn’t play a significant role in its energy mix,” Ernsberger said. Citing government figures, he said only three to four per cent of China’s energy is sourced from natural gas compared with 20-25 per cent for most other major countries.

Ernsberger said China expected to consume 120 billion cubic meters of natural gas annually by 2010 but would only be able to produce 80 billion cubic metres domestically. By 2020, that would rise again to 200 billion cubic meters compared with domestic production capacity of 120 billion cubic metres, he said, leaving a shortfall of 80 billion cubic metres, the same amount as the proposed Russian pipelines could deliver.

“You can see exactly where China thinks this pipeline is going to fit into its strategy,” he said.

Meanwhile, Russia sees the gas projects as much more than just a way to make money.

Energy politics

MOSCOW: Russia’s announcement of massive natural gas export plans to China was a direct response to calls by European states for a reduction of their energy dependence on Moscow, Russian newspapers reported. “The comments are an attempt to cool ‘hotheads’ in Europe who are thre-atening to reduce the-ir consumption of Ru-ssian gas,” Valery Nesterov, an expert from Troika Dialog investment bank in Mos-cow, said. — AFP