Page 7 - AsianOil Week 11 2022

AsianOil COMMENTARY AsianOil

Russia is a major
supplier of gas to China.

Enter the dragon 10% is held by China’s CNOOC. These positions
The next question is who these replacements will guarantee China 4mn tpy of LNG supply.
be. And an obvious choice would be China. Meanwhile, China’s Sinopec is a 47.4% part-
Several weeks before Moscow began waging ner in Rosneft’s Udmurtneft project in Russia’s
war in Ukraine, Russian President Vladimir Udmurtia region, where output totalled 120,000
Putin was in Beijing for talks with his Chinese barrels per day last year, up from 100,000 bpd in
counterpart, Xi Jinping. Both sides were keen 2020. Rystad expects the project to enter decline
to stress their unity in the face of heightened in the mid-2020s. Rosneft is also partnered with
tensions with the West. Now with Russia facing Beijing Gas at the Verkhnechonskneftegaz pro-
unprecedented isolation from the international ject. Beijing Gas has a 20% interest there, where
community, its dependence on China as both a overall oil and associated gas production hit
political and economic ally will only grow. 150,000 boepd in 2021.
Russia has been steadily expanding its eco- Rystad also sees potential for Indian inves-
nomic and political ties with China over the past tors to expand their interests in Russia. ONGC
decade, and energy trade has played a major Videsh Ltd (OVL) has a stake in the Sakhalin-1 Chinese investors
role in this shift. Since the development of the project, which ExxonMobil is leaving. OVL is
Eastern Siberia – Pacific Ocean (ESPO) pipeline also an investor in Rosneft’s Vankor field along- have also built up
over a decade ago, Russia has emerged as one of side Oil India, Indian Oil and Bharat PetroRe- a large position
China’s biggest oil suppliers, often jostling with sources. Oil India, Indian and Bharat also have
Saudi Arabia for the top spot. Russia’s LNG ter- an interest in the Taas-Yuryakh project, which in Russia’s
minals also ship gas to China, as in late 2019, BP is withdrawing from.
Gazprom launched sales to the country via the Yet while sanctions imposed in 2014 did upstream,
55bn cubic metre per year Power of Siberia not deter Chinese and Indian investors from
pipeline. When Putin was in Beijing, Gazprom expanding in Russia, Rystad cautions that this LNG and
and China’s CNPC agreed a second deal for an time around circumstances are different. petrochemicals
additional 10 bcm per year of pipeline gas sup- “It will take some time before accurate assess-
ply via the Far East. ments of all the risks associated with invest- sectors.
Chinese investors have also built up a large ments in Russia can be made,” Rystad says,
position in Russia’s upstream, LNG and petro- noting it does not “expect any immediate reac-
chemicals sectors. China is the largest investor tion from Asian companies to offers of stakes in
in Novatek-operated LNG projects. CNPC and Russian companies.”
Silk Road Fund own 20% and 9.9% stakes in “Once a clearer picture emerges, however,
Novatek’s 17mn tpy Yamal LNG plant, where there could be a significant spike in M&A activ-
TotalEnergies is also a shareholder. CNPC also ity in Russia, with Asian players potentially
has a 10% interest in Novatek’s 20mn tpy Arctic replacing majors in key projects,” the consul-
LNG-2, due on stream in 2023, and a further tancy says.™

Week 11 18•March•2022 www. NEWSBASE .com P7