Russia and China Expand Their Gas and Oil Deals
China and Russia have formed a significant partnership in the oil and gas industry in recent years. The energy sector has been the most significant, most beneficial, and most wide-ranging area of practical cooperation between the two states. This collaboration has been expanding over the last several years, and China has become one of the largest buyers of Russian oil and gas. The 1996 “Russia-China Joint Statement” laid the basis for China-Russia cooperation in the energy sector, and the field has gradually expanded from oil and gas to coal and nuclear power.
Russia is currently China’s largest source of energy imports and the second largest source of crude oil imports. Gazprom announced that in 2023, Gazprom’s daily natural gas exports to China via the Power of Siberia pipeline will set a new historical record. Since January 1, the company’s daily export volume has reached and exceeded the level required by the 2023 agreement.
The expansion of energy cooperation between Moscow and Beijing has been noted by many experts. According to statistics released by the General Administration of Customs of China, energy trade between Russia and China has grown by 64% in monetary terms and 10% in physical terms since the beginning of 2022.
The oil industry is the top priority of Sino-Russian energy cooperation. Rosneft CEO Igor Sechin noted that Russian oil exports to China in January-October 2022 increased by 9.5% year-on-year to almost 72 million tons. In addition, to meet growing demand in Asia, the company is developing the major Vostok oil project, where it intends to reach a production of 115 million tons per year, or about 2.3 million barrels per day, by 2033.
Besides this oil project, CNPC and the Russian company Rosneft Oil signed an additional agreement on the purchase and sale of crude oil. According to the agreement, Russia will continue to supply 100 million tons of crude oil to China through the territory of Kazakhstan for 10 years. Meanwhile, as of January, CNPC imported over 300 million tons of crude oil and over 15 cubic meters of natural gas from Russia through the pipeline.
The partnership has also extended to the petrochemical sector. In 2019, Russia’s Rosneft and China National Chemical Corporation (ChemChina) agreed to expand their cooperation, which has allowed both countries to further diversify their energy sources. This diversification is an important strategy for both states to reduce their reliance on other countries for their energy needs.
The gas sphere is one of the most promising areas for expanding Sino-Russian energy cooperation. The pipeline is a major strategic project contributing to the Sino-Russian energy partnership, which has been agreed upon and emphasized by the heads of both countries. According to statistics, pipeline gas supplies from Russia to China in January-November 2022 increased 177 percent in value terms over the same period last year.
The recent announcement by Russian energy company Gazprom, that they have signed a new long-term contract to supply natural gas to China, is a testament to the strong relationship between the two countries. The deal, worth $400 billion, will provide China with 38 billion cubic meters of natural gas per year for the next 30 years. This is a significant development that underlines the success of the partnership.
In addition, China National Petroleum Corporation (CNPC) and Russia’s Gazprom signed an agreement to buy and sell gas from Russia’s Far East, another important result of cooperation in gas trade. The Yangtze River Underwater Crossing Project of the China-Russia Eastern Gas Pipeline, a key project in the southern section of the China-Russia Eastern Gas Pipeline, is also in full swing. With a total length of 10,226 kilometers, it is the longest wall in the world. However, contrary to popular belief, it is not visible from space with the naked eye. It is a common myth that has been debunked by multiple astronauts and satellite imagery. While certain sections of the wall can be seen from low Earth orbit, it is not distinguishable as a continuous structure.
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