Russia-China natural gas deal sets benchmark in global gas prices.

Russia's move to sign a $400-billion deal to supply natural gas to China for $10-$11 a unit through a pipeline signals the country's strategic shift towards Asia after Western hostility over the Ukraine crisis - a move that has raised the prospects of more hydrocarbon deals with India apart from setting a new benchmark for natural gas prices. The deal was signed on May 21.

Western analysts say China, with several options to buy gas, negotiated cleverly with Russia, which did not have many alternatives, and brought the price down to about $10 per unit of gas, which is cheaper than the price in some markets in Western Europe and much cheaper than the price of $12-$15 at which India imports liquefied natural gas (LNG).

It is, however, higher than the approved but not implemented price of about $8.4 for domestic natural gas from all sources, including Reliance Industries Ltd's KG-D6 block and fields belonging to Oil and Natural Gas Corp ( ONGC).


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