Russia and China are enhancing their “growing energy partnership.”
A series of agreements were confirmed on Friday (Feb. 4) including oil and gas deals, during a meeting between Russian President Vladimir Putin and his Chinese counterpart Xi Jinping in Beijing.
“Our oilmen have prepared very good new solutions on hydrocarbon supplies to the People’s Republic of China,” said Putin who was in Beijing to attend the Winter Olympics. “And a step forward was made in the gas industry,” he added.
Russian oil giant Rosneft signed a deal with Chinese state energy major CNPC to supply 100 million tonnes of oil through Kazakhstan over 10 years, effectively extending an existing deal.
Separately, Russian state-owned energy giant Gazprom agreed to supply CNPC with 10 billion cubic metres of gas a year. The deal would be settled in euros, in line with efforts by the two states to diversify away from U.S. dollars.
The gas sales alone could generate around $37.5 billion over 25 years, according to Reuters calculations, assuming an average gas price of $150 per 1,000 cubic metres as reported by Gazprom for its current deal with China.
Russia, Beijing’s No. 3 gas supplier, already sends gas to China via the 4,000-km Power of Siberia pipeline, which opened in 2019, with the new route not expected to open for two to three years.
“This deal is a part of growing energy partnership between Russia and China and Russia’s policy to diversify export markets from Europe to Asia,” Anna Kireeva, research fellow at the Centre for Comprehensive Chinese Studies and Regional Projects at the Moscow State Institute of International Relations told South China Morning Post. “As for China, its strategy to diversify the sources of energy imports has also been in motion for a certain period of time” she added.
China also lifted restrictions on Russian wheat and barley imports.
With reporting by Reuters, SCMP