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EU under pressure over Russia-China gas deal

Russia and China have signed a 30-year gas agreement. The deal comes as Russian state-run gas producer is threatening to cut off supplies to Ukraine, which could impact gas supplies to Europe as Ukraine serves as the main transport route for Russian gas supplies to the continent.

LONDON: After more than 10 years in discussions, Russia and China have finally signed a 30-year gas agreement worth US$400 billion.

The deal comes as Russian state-run gas producer Gazprom is threatening to cut off supplies to Ukraine, which owes the supplier more than US$3 billion in arrears.

It highlights the difficulties and strains in Eastern Europe and diplomatic strains in Western Europe.

Russia has, of course, been keen for some time to find alternatives and extra markets for its gas supply because of the potential threat of sanctions over the crisis in Ukraine.

Now, the European Union is urging Russia not to disrupt the gas flow to Ukraine, and instead to resolve this issue of some US$3.5 billion of arrears to Gazprom before the deadline runs out in 10 days' time.

The European Commission’s president Jose Manuel Barroso said that the issue must be settled.

Gazprom is threatening to cut off the gas supply to Ukraine if the issue of the multi-billion-dollar arrears is not resolved, and this could affect other European countries.

Ukraine serves as the main transport route for Russian gas supplies to the continent, so the knock-on effect of cutting off to Kiev is far wider than just Ukraine itself.

The EU Commission, throughout the negotiations over the last few months, has been acting as an intermediary between Moscow and Kiev.

But there is now a sense of real pressure following the China-Russia deal to resolve this issue with just 10 days to go until that deadline, as many people are worrying there could be serious knock-on effects across the whole European continent.

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