The 30-year agreement between Russia’s Gazprom and China National Petroleum Corp (CNPC) was formally signed by Russia’s President Vladimir Putin during a summit in Shanghai between the leaders of the two nations.
Russia has been keen to find an alternative energy market for its gas as it faces the possibility of European sanctions over the crisis in Ukraine and while no officially price has been given for the Russia-China deal, it is estimated to be worth over $400 billion.
President Putin said in a statement to the Russian news channel Rossiya: "The price is satisfactory for both sides. It is tied, like it is envisaged in all our international contracts with Western partners, specifically our partners in Western Europe, to the market price on oil and oil products. It is an absolutely calibrated, general formula for pricing."
The agreement is expected to deliver some 38 billion cubic metres of natural gas a year eastward to China's burgeoning economy, starting around 2018.
Alexei Miller, Chief Executive of Gazprom said the new deal was "the biggest contract in the entire history of the USSR and Gazprom - over one trillion cubic metres of gas will be supplied during a whole contractual period."
China is Russia's largest single trading partner, with bilateral trade flows of $90 billion in 2013. The two neighbours aim to double the volume to $200 billion in the next ten years.