Chinese officials announced yesterday that they will buy new natural gas reserves piped in from Western Siberia, another move suggesting Russia’s pivot to the east in reaction to sanctions that cut its economy off from Western capital and retail markets. The agreement specifically is between Gazprom and CNPC (both state-owned oil and gas entities) to supply some 30 billion cubic meters of gas per year from the Altai region into the Chinese market. However, prices for this agreement have not been set. Beijing announced it is expecting the deal to be finalized later this year.

For Russia’s part, it has made a commitment to sell gas from this region to China, which is the only real customer that is close enough for the LNG to be economical. Last May, President Vladimir Putin’s state visit to Beijing ended with the announcement of a $400 billion agreement to sell 38bn cubic meters to China. It is unclear if this is a revision of the previous deal, or a separate one altogether.

The official title of the joint project is the “Power of Siberia” pipeline but this falls under China’s larger strategy of “One belt, One road” as well that aims to create a new Silk Road that would seek to recreate the economic dominance of China during the Middle Ages.

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News Briefs:

• Despite the optimism that a deal on Iran’s nuclear weapons programme is close after statements from lead negotiators of the P5+1 powers, Senate and House Republicans in the US have composed an open letter to Iran’s top leaders telling them that any deal they reach would be “nothing more than an executive agreement,” implicitly threatening the passage of legislation that would re-introduce sanctions and tensions. Some 47 joined in the signing of the letter, which was penned by the staff of Senator Tom Cotton of Arkansas.

• The Russian government has arrested 5 Chechens for the murder of prominent dissident Boris Nemtsov last week in Moscow. Two were charged in a Moscow court on Sunday while three others were jailed pending a further investigation. Despite the public court appearances, no details have been released relating to charges or specific connections to the Nemtsov assassination. The shooting took place within eyesight of the Kremlin, leaving many to question how a murder could have taken place in one of the most heavily guarded places in all of Moscow.

• The Russian luxury goods and tourism industry has been suffering greatly to limit the damage of decreased demand. Russian tourists are major buyers of European luxury goods and most of those clients have disappeared in the past few months. Spending by Russian tourists fell some 17% in total last year, and a year on year plunge of 51% in the month of January portends an even steeper decline for 2015.

• Ukrainian separatists have reportedly pulled heavy weaponry/artillery from the front lines around Donetsk, a de-escalation that represents the first true concession made by the separatist side since the signing of a ceasefire last month. The Minsk II Accords, as they are becoming known, appear to be holding most, if not all of their water in keeping the crisis contained and satisfying international leaders. Observers from the OSCE are attempting to create a buffer zone of some 50 km between the two sides in order to further stifle tensions.

• Iranian President Hassan Rouhani will be paying another official visit to Ashgabat, Turkmenistan tomorrow. This visit is at the request of Turkmen dictator Gurbanguly Berdimuhamedow, where the official plan is to sign more bilateral cooperation agreements and appear in a joint press conference. Likely, these agreements on the subject of trade will portend internal Iranian government expectations of a nuclear deal which will lift international sanctions – with Turkmenistan as one of Iran’s largest current trade partners.