Russia expects to further increase oil and gas exports to China despite sanctions

Russia expects to further increase oil exports to China and deepen cooperation on gas exports as well. Russian Deputy Prime Minister Alexander Novak said this today at a business forum in Beijing, adding that there is still room to increase exports. China received its first shipment of liquefied natural gas (LNG) from the Arctic LNG 2 project in August. The project is subject to Western sanctions because of Russia’s military invasion of Ukraine. Reuters reports.

Since February 2022, when Russian troops launched an invasion of Ukraine on the orders of President Vladimir Putin, China and India have become the main buyers of Russian oil. China imports around 1.4 million barrels of Russian oil per day by sea and approximately 900,000 barrels per day by pipeline.

In October, the United States imposed sanctions on Russia’s two largest oil producers, Rosneft and Lukoil. Putin described the sanctions as a hostile act but added that they would not have a significant impact on the Russian economy. He also stressed Russia’s importance to the global market.

Conflicting reports have emerged about the outlook for Russian oil supplies to China and India, Reuters noted. Total Russian oil exports have so far remained relatively stable. Novak said today at the Chinese-Russian business forum in Beijing that Russia was discussing options for expanding oil exports to China with its Chinese partners.

“We see prospects for increasing oil supplies by pipeline and by sea,” the Russian deputy prime minister said. He noted that intergovernmental agreements allow oil supplies to China via Kazakhstan to be extended by ten years, until 2033.

Novak later met Chinese Vice Premier Ding Xuexiang in Beijing, the Russian government said. “Russia is a reliable supplier of oil and gas to China. We will continue to work actively to expand energy cooperation as a key area of partnership between the two countries,” Novak said at the meeting.

Russia is also actively cooperating with China on the production and export of LNG transported by sea. China’s state-owned energy giant CNPC has a 20 percent stake in Russia’s Yamal LNG plant, while Chinese company Silk Road Fund owns 9.9 percent of the project. It is led by Russian company Novatek.

Russia’s LNG exports are constrained by sanctions imposed by the United States in response to its invasion of Ukraine. They mainly target the new Arctic LNG 2 plant and significantly restrict the use of the tanker fleet to transport the fuel. China received the first cargo of LNG from the sanctioned Russian project in late August, days before Russian President Putin met Chinese President Xi Jinping.

“Despite the adverse external circumstances, it is absolutely essential that we continue working together to create the conditions needed to implement joint projects,” Novak said at an economic forum in Beijing.