Russia looks to China for gas contracts

Russia is forging stronger ties with China to diversify its gas buyer base, following payment disputes with countries such as Ukraine and to compete with the growing US liquefied natural gas (LNG) market, say analysts. Meanwhile, Europe is looking to lessen its dependence on Russian gas after several years of geopolitical uncertainty.

"Diversifying Russia's client base makes economic and geopolitical sense, as the centre of the global economy shifts steadily away from Europe and the US, and towards non-G7 economies," says Kit Juckes, head of investment strategy at investment manager ECU Group.

At the end of 2009, Gazprom, producer of 85% of Russia's gas output, signed an agreement with China's biggest state-owned petroleum