THE POWER OF SIBERIA: BEHIND THE SINO-RUSSIAN GAS PARTNERSHIP

Abstract

Russia and China agreed in May 2014 to initiate their trade in gas. Unexpectedly and abruptly, they escaped from a decade-long impasse in negotiating a gas deal. The timing of their gas agreement-called the Power of Siberia-corresponds to or immediately follows the political crisis in Ukraine, rising conservatism in Russia, declining oil prices, and decreasing demand for Russian gas in Europe. My thesis utilizes three theoretical lenses to study Russia's incentives for turning to the Chinese gas market in 2014: geopolitics, ideational liberalism, and commercial liberalism.

I argue that Russia's gas customer base in Europe started exerting significant pressure on Russia's dominant gas exporter, Gazprom, which exacerbated the losses Gazprom incurred from the declining price of oil in early 2014. Europe's import diversification strategies and economic sanctions against Russia deteriorated the conditions of Gazprom's operation in Europe and harmed the company's reputation as a reliable energy supplier. Gazprom was subsequently searching for an alternative gas market to compensate its losses in Europe and diversify its supply. It found a natural partner in China, where a rapidly growing economy was experiencing a major gas shortage.