Several days before the St. Petersburg International Economic Forum, the Chinese Foreign Ministry officially confirmed the participation of President Xi Jinping, who was in Russia on a state visit, at the forum and its plenary meeting. In light of the ever more US-Chinese differences, this could be seen as an invitation to closer Russian-Chinese economic cooperation, primarily in the gas sector. However, it turned out to be more of a symbolic gesture. The only new document that has been signed in this sphere is the Heads of Agreement between Novatek, Gazprombank and Sinopec on establishing a joint venture to market LNG and natural gas to end-customers in the People’s Republic of China.
On the one hand, the goal of this agreement is to sell gas to end consumers in a country with the world’s largest natural gas demand. Over a period of the past two years the consumption of gas in China has grown by over 15 percent annually, largely due to new import deals. On the other hand, China’s regulated gas market often generates losses for importers, while its liberalization terms are still under discussion. This is why Russian and Chinese companies have only signed “heads of agreement,” which is usually seen in the business world as a cover for the absence of a firm agreement.