China and Russia failed to sign a $400 billion gas supply agreement on Tuesday, despite growing urgency for the Kremlin to seal a deal as it faces economic and political isolation in the West over the crisis in Ukraine.
Negotiators from both countries have been unable to bridge differences on price, a spokesman for Russian President Vladimir Putin said in Shanghai, meaning that the contract was not signed on Tuesday as many in the industry had predicted.
But there is still a chance that the two sides could agree before Putin leaves China on Wednesday, or, more likely, in time for an economic forum in the Russian city of St. Petersburg later this week.
Despite disappointment so far over an energy deal seen as vital to both countries' long-term economic interests, Putin did receive a rare nod of support from Chinese President Xi Jinping over the Ukraine crisis.
In a statement issued after the two leaders met, Russia and China called for the de-escalation of tensions in Ukraine and for "peaceful, political ways to resolve existing problems." The countries also referred to the crisis as "domestic".
Across much of the rest of the world, Putin stands accused of fomenting pro-Russian sentiment in neighbouring Ukraine, which has already lost the peninsula of Crimea after it was annexed by Moscow.
In more recent conciliatory steps, Putin ordered Russian forces massed on the Ukraine border to return to bases and welcomed what the Kremlin called initial contacts between the Ukraine government and those calling for more power for largely Russian-speaking regions in the east.
China's Xi has underscored the importance of ties with Russia, and Moscow was the first capital he visited after assuming the presidency last year. Xi also attended the Winter Olympics in Sochi at Putin's invitation.
While observing a joint naval exercise conducted outside of Shanghai, Xi and Putin said the two neighbours would cooperate to maintain stability in the region.
But, while the two see eye-to-eye on many diplomatic issues including the conflict in Syria, and generally vote as one on the United Nations Security Council, China has been less willing to support Russia openly on Ukraine.
CHINA "HAS UPPER HAND"
Expectations had run high that Putin's China visit would provide the setting for both parties to ink a contract under which state-owned Gazprom would supply China National Petroleum Corp (CNPC) with 38 billion cubic meters (bcm) of natural gas a year for 30 years.
After more than a decade of