Page 4 - FSUOGM Week 06 2022

FSUOGM COMMENTARY FSUOGM

Russia expands China ties

with new gas deal

China and Russia are expanding their ties at a time when both countries have

tense relations with the West

RUSSIA RUSSIA and China have clinched a new gas sup- According to the Kremlin, up to 15 agreements
ply deal, as Moscow doubles down on its pivot could be signed between the two countries dur-
WHAT: towards Beijing against a backdrop of height- ing Putin’s visit.
China and Russia have ened tensions with the West over Ukraine.
signed a 10 bcm per year Russia’s national gas company Gazprom Expanding ties
gas supply deal. announced on February 4 that it had agreed on Russia has been steadily expanding its economic,
the annual sale of 10bn cubic metres per year and more recently, its political ties with China
WHY: of natural gas to China’s CNPC over a 30-year over the past decade, and energy trade has played
The contract builds on period. The agreement underpins the develop- a main role in this shift. While the EU is still Rus-
a 38 bcm per year deal ment of a new export route for Russian gas to sia’s top export market, China is in second place,
agreed in 2014. China in the Far East. with its imports totalling $79.3bn in value in
Russia already pumps gas to China via the 2021, according to the Chinese customs agency.
WHAT NEXT: Power of Siberia pipeline, which was opened in Oil and gas accounted for $44.6n of this sum.
Analysts are hopeful that late 2019. These supplies are sent under a $400bn Russia has jostled in recent years with Saudi
another, larger contract deal the two countries reached in 2014, not long Arabia for the position of China’s biggest oil
could be reached within after ties between Russia and the West collapsed supplier. Last year, it delivered 1.59mn barrels
the next 12 months. following Moscow’s annexation of Crimea. per day (bpd) of crude, accounting for 15.5%
While Power of Siberia is filled with gas from of Chinese imports. These supplies are sent
onshore fields in Eastern Siberia, the latest con- via the Eastern Siberia Pacific Ocean (ESPO).
tract is for supplies from the South-Kirinskoye Chinese investors also have a position in Rus-
field off the east coast of Sakhalin Island. sia’s upstream, LNG and petrochemicals sec-
The deal was signed on the same day as Rus- tors, most notably at Novatek’s Yamal LNG and
sian President Vladimir Putin’s arrival in Beijing upcoming Arctic LNG-2 plants in the Russian
to attend the 2022 Winter Olympics. Moscow Arctic.
and Beijing are eager to stress their close ties Russia is also China’s third-largest gas sup-
in the face of worsening relations with the US. plier, sending 16.5 bcm of the fuel in 2021, via

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