Is Russia Creating a Natural Gas Alliance With China?

After decades of negotiations, Russia will now supply natural gas to China in a deal worth hundreds of billions of dollars.

May 28, 2014 at 1:07PM

Gazprom signed one of its biggest natural gas contracts last week, supplying China with an estimated 38 billion cubic meters of natural gas per year. The deal diversifies Russia's natural gas customer base, which currently supplies 30% of Europe's natural gas, half of which flows through Ukraine. 

Russia needs high commodity prices for its oil and gas resources to balance its budget, while China desperately needs cleaner burning fuels while it attempts to crack its own shale resources. Energy analyst Taylor Muckerman believes this deal is just a new energy reliance between Russia and China, but more could be at play. 

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Joel South has no position in any stocks mentioned. Taylor Muckerman has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.