Russia, China talk economic cooperation at Energy Business Forum
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Leading Chinese and Russian corporations, big banks, government officials, and members of the scientific community, including Rosatom, attend the VI Russian-Chinese Energy Business Forum.
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Chinese President Xi Jinping, right, and Russian President Vladimir Putin look at each other as they shake hands prior to their talks in Beijing, China, Thursday, May 16, 2024. (AP)
Chinese President Xi Jinping asserted China's readiness to develop cooperation with Russia in energy, which includes maintaining the stability of energy production chains.
"China is willing to work with Russia to continue to develop mutually beneficial energy cooperation, maintain the stability and resilience of energy industrial and supply chains, and help promote a stronger, greener and healthier development of the global energy industry," Xi said during the VI Russian-Chinese Energy Business Forum.
Leading Chinese and Russian corporations, big banks, government officials, and scientific community members were present at the meeting. These include representatives from CNPC, Sinopec, State Energy Corporation of China, Gazprom, Rosneft, Rosatom, Rushydro, and other organizations.
Igor Sechin, the CEO of Rosneft and the executive secretary of the Russian Presidential Commission for the Strategic Development of the Fuel and Energy Sector and Environmental Safety announced on Tuesday that Russian energy exports to China rose by 4% year over year to $46 billion in the first half of 2024.
“As a result, our country provided almost 20% of China’s energy imports in value terms. Let me remind you that in 2021 this figure was only 13%,” he added.
Far East support
Given that China consumes 16% of the world's liquid hydrocarbons and Russia generates 11% of it, Sechin observed that the two nations' collaboration in the energy industry is largely influenced by their locations and relative positions on the global energy map.
As stated on Tuesday by Sechin, China will import 40 billion cubic meters of gas from Russia this year, up from 34 billion cubic meters last year.
"Last year, China imported 34 billion cubic meters of natural gas from Russia," he said.
"At the same time, Russia has every opportunity to increase gas supplies to 100 billion cubic meters per year and above, taking into account our powerful resource base in Western and Eastern Siberia, as well as in the Far East," he stressed.
The amount of gas supplied by the Power of Siberia pipeline is projected to expand to 30 billion cubic meters in 2024 and 38 billion cubic meters the following year up from 22.7 billion cubic meters in 2023.
Supplies via the "Far Eastern route" are anticipated to start arriving in 2027 in the amount of 10 billion cubic meters annually. A proposal to provide China with goods in an estimated volume of 50 billion cubic meters through the "Western route"—via the Power of Siberia 2—is under consideration.
In comparison to Middle Eastern purchases, China benefited from $14–$18 billion worth of Russian oil between 2022 and June 2024, he revealed.
"In turn, China is the largest buyer of Russian oil. According to our estimates, from January 2022 to June 2024, the economic effect for China from imports of Russian oil compared to purchases from Middle Eastern suppliers ranges at $14-$18 billion," Sechin said.
Russian companies ready for Chinese energy
According to Sechin, Russia intends to increase China's direct investments in its energy sector.
"We hope for an increase in China's direct investments in the Russian energy sector, which is characterized by high investment returns for investors and no risk of return on equity," he stated.
China's direct investments in the Russian energy sector and other businesses are expected to enhance energy security and foster mutual collaboration between the two nations.
"Such investments could create a significant synergistic effect, because Russia is one of the few countries that consistently invests in the development of traditional energy, and China has turned from an importer to an exporter of capital over the past few years. So, last year, China's announced direct investments in new projects abroad exceeded a record $160 billion," Sechin added.
He added that Russian companies are willing to ensure energy security and energy consumption in China.
"Russian companies are ready to contribute to the issue of ensuring China’s energy security and energy consumption."
Sechin added that the necessity for a dependable and secure energy supply was growing as a result of China's ongoing economic recovery. The International Economic Agency (IEA) predicts that China's consumption of liquid hydrocarbons will rise by 9% by 2030.
"In the context of the events currently taking place in the Middle East, it is important to note the security of supplies of Russian oil and other energy resources to China. A significant part of Russian oil is supplied through the ESPO [Eastern Siberia — Pacific Ocean] oil pipeline, which in the current situation is more a reliable transportation channel compared to tanker transport through the Strait of Hormuz or the Suez Canal, due to the growing geopolitical instability of these regions," he added.
The new tanker fleet
Sechin disclosed that Russia, in collaboration with Chinese shipbuilders and component suppliers, can establish a tanker fleet to navigate the Northern Sea Route.
The Northern Sea Route (NSR) is the shortest route between Europe and Asia, spanning over 3,000 nautical miles (5,556 kilometers) and connecting the Barents Sea and the Bering Strait. It is also the quickest maritime route that connects Russia's European region to the Far East. By 2024, over 72 million tonnes of cargo are anticipated to be transported along the NSR; by 2030, that number is projected to approach 194 million tons.
"The operation of the NSR will require a high-ice-class tanker fleet, which can be created in cooperation with Chinese shipbuilders and component suppliers."
China's Vice Premier of the State Council, Ding Xuexiang, stated on Tuesday that China and Russia should encourage the implementation of large-scale energy projects and strengthen their cooperation on renewable energy.
As cited by China Central Television (CCTV), Ding said during his speech at the Chinese-Russian Energy Business Forum, "It is necessary to promote trade and investment cooperation in the field of energy, jointly promote the implementation of major energy projects, deepen cooperation in such promising areas as renewable energy, hydrogen energy and the carbon dioxide emissions quota market, as well as create new growth points for cooperation."
The official stated that China and Russia should work together more closely on global platforms and encourage the development of an equitable framework for managing energy.
