Page 4 - AsianOil Week 33 2022

AsianOil COMMENTARY AsianOil

Russia’s Asian oil and gas

pivot will take too long

Russia’s pivot towards Asia will reap great rewards, but its capacity to offset

declines in the European market will be limited in the next few years

RUSSIA-ASIA RUSSIA is looking to fast-track its pivot to Asia reserves, but Beijing would be wary of abandon-
in order to offset the loss of revenues that its ing its careful energy-diversification policy and
WHAT: energy divorce with the EU is bringing about. inordinately relying on Russia.”
Russian plans to expand But according to the International Energy Russia has already accounted for 18.4% of
eastern markets for its oil Agency (IEA), in the best-case scenario it would Chinese oil imports over the past year, even
and gas will take time. take the country at least a decade to ramp up gas though policymakers in Beijing have informally
supplies to Asia to a level close to its 2021 exports limited reliance on any one country for more
WHY: to the EU, which amounted to 155bn cubic than 15% of the total. Within this frame, China
Infrastructure constraints metres per year. Diverting oil supplies eastwards could expand purchases of Russian gas, which
and technological will be easier, but will similarly take time. still only account for 7% of the overall volume,
limitations due to Russia’s mostly Soviet-era gas export pipe- but Shagina noted that “even optimistic scenar-
sanctions will make its lines are largely geared to send supplies from ios for Russian energy diversification to China
plans harder to realise. large fields in Western Siberia to Europe. Its only are highly contingent.”
other options are expanded LNG exports, pri- Russia has already reached a deal to sell an
WHAT NEXT: marily from the Arctic, and an expansion in gas extra 10 bcm per year of gas to China via a new
In the coming years it trade with China, through the development of Far East route, building on the 38 bcm per year
will be unable to offset the Power of Siberia 2 pipeline, and additional it is already contracted to deliver at peak via the
declines in westbound links. The IEA’s scenario assumes that Russia will Power of Siberia pipeline. But sanctions have
exports, with extra successfully build and expand its gas infrastruc- hindered the development of the offshore fields
supplies to Asia only ture. But as Dr Maria Shagina, at the University that would be needed to supply this gas.
kicking in later, towards of Zurich, notes in a recent article for IISS’ Sur- Moscow and Beijing have also discussed
the end of the decade. vival: Global Politics and Strategy, “that would sending an additional 6 bcm per year of gas
require substantial capital and access to energy via Power of Siberia, but James Henderson, an
technology at a time when sanctions prohibit it.” expert at the Oxford Institute for Energy Studies
“On top of infrastructure bottlenecks and (OIES), notes that it would take until the second
logistical challenges, uncertainty surrounds half of this decade for the pipeline to increase
Asia’s demand and energy security concerns,” flow to the full 44 bcm per year.
Shagina writes. “Russia has become China’s Russia’s largest project in the works is Power
largest oil supplier, surpassing Saudi Arabia. of Siberia 2, which would pump 50 bcm per
China has been quietly replenishing its strategic year of gas to China via Mongolia, from fields

P4 www. NEWSBASE .com Week 33 21•August•2022