China and Russia, as complementary energy players, seem to be perfectly matching in the energy sphere.
Russia is among the world’s three largest oil producer (besides the US and Saudi Arabia) and China is today the world’s largest oil and energy consumer after the United States. While bilateral trade-flows are growing, there is great potential inherent in the energy relationship.
Russia has abundant energy sources (oil, natural gas, coal and nuclear power technology) and in addition a close proximity and over 4000-kilometre shared border offer numerous transportation options.
Some landmark business agreements and joint projects between China and Russia in energy sector:
- Agreed initially in 2011, Eastern Siberia–Pacific Ocean (ESPO) pipeline; a 25-year oil deal worth $270 billion (supply 360 million tons of crude to China).
- Massive agreement in 2014, The “Power of Siberia” gas pipeline is one of the biggest Russia-China projects and the business deal worth $400 billion for 30-years (deliver 38 billion cum of Russian gas to China annually). The construction of the 3370-kilometer long natural gas pipeline was on the schedule and gas deliveries to China started in December 2019.
- In 2018, Moscow and Beijing plan to build another pipeline – Power of Siberia 2 or the ‘Western Route’ – that will deliver another 30 billion cubic meters of natural gas from Russia to China.
- Novatek is producing and enlarging LNG-production in Yamal and is building a marine LNG transshipment complex in the Kamchatka Peninsula in Russia’s Far East, a Russian LNG hub for shipments to consumers in the Asia-Pacific region. Novatek signed a deal with two Chinese companies to further develop a massive Arctic LNG 2 project.
- In October 2019, Russia and China announced to build world’s largest petrochemical plant in Russia, an agreement worth more than $13 billion.
- In 2012, a Russia-China electricity transit line with 500 kV began operation
- cooperation in nuclear energy started in 1999 by building the first phase of Tianwan nuclear plant, a new nuclear business deal ($ 3 billion) in June 2019, to continue construction of nuclear plants in Xudapu and Tianwan in China while in the global nuclear power market, Chinese and Russian projects have started to dominate the world’s nuclear plant construction market, Rosatom becoming a leading nuclear power company worldwide.
- complementarity between China and Russia also appears to extend to the coal sector. Russia holds more than one-fifth of all proven coal reserves (second only to the US). Coal serves as China’s predominant source of energy, making up 70 per cent of China’s overall energy consumption and coal demand is expected to continue to rise. In 2009 China became a net coal importer and purchased approximately 12 million tons of coal from Russia, 10 times more than in 2008. Russia will annually provide 15 million tons of coal until 2015, then 20 million until 2035.
US sanctions, trade wars and protectionism increasingly strengthen energy bonds between Russia and China in 2018 – 2019 and far beyond into the future. Energy ties between China and Russia will see deepening development as the neighboring countries are planning to jointly work on the Arctic shelf projects.