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Russian Response: China Gas Deal Offers Leverage vs. West, Ukraine

NEW YORK ( TheStreet) -- Russia has responded to U.S. and European sanctions by signing a long-term deal to supply China with natural gas.

Russia and China signed the deal on Wednesday, providing the world's top energy user a major new source of the clean-burning fuel.

Russia will supply 38 billion cubic meters of gas to China each year for 30 years under a contract valued in excess of $400 billion overall, Reuters reported.

The gas will be transported along a new pipeline linking Siberian gas fields to China's main consumption centers near its coastline.

Russian President Vladimir Putin and Chinese leader Xi Jinping oversaw the signing in Shanghai between Russian state-controlled company Gazprom (OGZPY) and China National Petroleum Corp.

"This is the biggest contract in the history of the gas sector of the former USSR," Putin said. "Our Chinese friends are difficult, hard negotiators," he added, mentioning that talks lasted until 4 a.m.

The deal is a victory for Putin, who has dealt with sanctions imposed on Russia since the country annexed Crimea.

The new partnership is pivotal for Russia as customers in Europe attempt to reduce their reliance on Russian gas.

Alexei Pushkov -- a Putin loyalist and senior member of parliament, who is included on a U.S. list of sanctions -- said the gas deal showed Russia can't be isolated.

"Gas contract with China for 30 years has a strategic importance. Barack Obama should abandon the policy of isolating Russia: it will not work," Pushkov said on Twitter (TWTR - Get Report).

Russia has remained steadfast in its dealings with Ukraine since sanctions were imposed by Western countries. Although outside investors have fled the country, pushing the country's equity market lower, Russia has remained undeterred in its behavior.

The country's supply of natural gas and resources gives it leverage, which could continue to fuel Putin's "no regrets" attitude toward foreign relations.

>>Read More: Russia and China Sign Mega Gas Deal That Changes Everything

>>Read More: Dicker: China and Russia Will Strike a Natural Gas Deal

At the time of publication, the author had no position in any of the stocks mentioned.

Follow @macroinsights

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

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