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Sino-Russian Energy Cooperation: Move in the Same Direction in the Turmoil





The energy cooperation between China and Russia has become essential to their bilateral relations. The two countries continuously move in the same direction as the world goes through turmoil. Both China and Russia need each other for their energy demands, and this cooperation comes at a time when the international economic and political environment is rapidly changing.


The Oil and Gas Field Is the Top Priority of the Sino-Russian Energy Cooperation.

Over the past decade, the energy cooperation between China and Russia has intensified, with oil and natural gas being the primary components. China has been actively investing in Russia's oil and gas industry, and the two countries have signed several long-term oil and gas supply agreements. The construction of the Power of Siberia gas pipeline, one of the most significant energy cooperation projects between the two countries, saw its first gas deliveries start in December 2019.


The "Power of Siberia" pipeline was constructed in September 2014. In 2019, Russia began supplying gas to China through the pipeline. On December 21, 2022, the Kovytka natural gas condensate field in the Irkutsk region of Russia and the Kovytka-Chayanda gas pipeline officially commenced gas production, completing the full line of the "Power of Siberia" natural gas pipeline within Russia. In the future, the annual gas supply to China through the pipeline is expected to reach the contracted amount of 38 billion cubic meters gradually. The "Power of Siberia" is an essential part of the energy cooperation between China and Russia, and the two countries will continue to expand their cooperation in other energy sectors.


Regarding the coal trade, from January to September 2022, China imported 47 million tons of coal from Russia, representing a YoY increase of 11%. Regarding the crude oil trade, from January to October 2022, China imported 33.26 million tons of Russian crude oil through pipelines. In terms of natural gas trade, the China-Russia East Route gas pipeline has already enabled direct delivery of Russian gas to Shanghai. By January 2023, the daily delivery capacity of the pipeline is expected to increase further to 61 million cubic meters, with a total annual delivery volume exceeding 22 billion cubic meters.


As the world goes through the COVID-19 pandemic, Russia's oil industry, like many others around the world, has taken a significant hit due to plummeting oil prices. China, on the other hand, has been looking for ways to diversify its own energy portfolio, which is heavily reliant on coal. The energy cooperation between the two countries has brought stability to their respective energy sectors, with Russia supplying oil and gas to China and China investing in and providing the necessary technology for developing Russia's oil and gas reserves.


However, the energy cooperation between China and Russia is not limited to oil and gas. In recent years, China has become a world leader in renewable energy, investing heavily in solar, wind, and hydropower. With its vast landmass and natural resources, Russia has the potential to develop its own renewable energy sector. There have already been talks of joint ventures between Chinese and Russian companies in the renewable energy sector as both countries look to move towards clean energy.


"Russia's largest trade comes from China, growing very fast. This growth momentum was already established long before various restrictions and the redistribution of our goods to Asia, including China." Putin presented at the plenary session of the annual meeting of the Valdai International Debating Club in 2022. Russia's external relations, including energy trade, are "turning to the east", which creates more convenient conditions for deepening cooperation in energy and other fields between the two countries.


The energy cooperation between China and Russia is not without its challenges, though. The two countries have different geopolitical interests and have been on opposite sides of some international issues. Russia's annexation of Crimea and its involvement in Syria have caused tension between Russia and the West, of which China has been critical. China's increasing assertiveness in the South China Sea and its growing influence in the Asia-Pacific region have also caused concerns for Russia.


However, for Russia, the deteriorating outlook for exports to the West means that Russia will seek to diversify its exports to the East, experts said. In this context, by the early 1930s, Russia's pipeline gas supply to China may reach a maximum of 130 billion cubic meters, and the amount of gas supplied to China through the western route may reach 50 billion cubic meters.


 

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