China Continues to Expand Presence in Russian Energy Sector

China has become an ever-increasing force in Russia’s energy sector. There have been many indicators of this progress leading up to last year, including Russia and China Screen-Shot-2016-03-21-at-5.50.27-PM-compressorcollaborating on agreements to work together in several capacities involving nuclear energy, space technology, and a cloud computing /data processing center.

A trip to Beijing at the end of last year by Russian Prime Minister Dmitry Medvedev solidified China’s intentions with regard to the energy partnership: The visit culminated in an annual meeting for heads of government, during which five energy agreements were signed. The most prominent of these was a binding agreement between Russian gas producer Novatek and China’s Silk Road fund on the sale of 9.9 percent share in the Yamal Liquefied Natural Gas Project. With estimated reserves of 907 billion, the project is expected to launch in 2017, and aspire to a fully functioning plant by 2021, just in time for the Beijing Olympics in 2022.

The Winter Games are a big motivator in the long-term trajectory of China’s energy initiative. The country is seeking to shut down coal power generation in order reduce the effects of smog in the country in favor of more environmentally sound power-generation. According to Alexander Pasechnik, head of research at the National Energy Security Fund, in an article from Russia Beyond the Headlines “China is literally suffocating because of coal-fired power generation.”

The funding that China provides in these initiatives is crucial for Russia’s involvement, especially considering the recent economic sanctions that European allies have placed on Russia’s energy sector, according to The Washington Post. With an agreement to pass about $12 billion in loans from Chinese Banks through the involvement of Silk Road Fund, this deal secures China as a stronghold in this specific partnership, as well as in the energy sector overall. In addition, Chinese companies also entered into agreements with Gazprom and CNPC, two Russian energy companies, on projects involving cross border gas pipelines and other plant projects in eastern China at the end of last year.

Despite recent economic changes both in shift of global energy prices and the Chinese economy, Russia is committed to maintaining its energy partnership with China. “Moscow is keen to “pivot to the East” to reduce its reliance on exporting energy to the West due to a series of rows, notably over Russia’s annexation of Crimea and support for separatists in eastern Ukraine.” According to Gazprom’s media relations team comment in the Reuters article quoted above earlier this year, “the project to ship gas from eastern Siberia to China is on track.”

China’s partnership with Russia isn’t the only indicator of its impact and involvement in global energy. Since late in the third quarter of last year, the sovereign state invested 26.7 billion into renewable energy, even more than the United States, which came in at 13.4 billion. Regardless of the recent fluctuations in oil prices, China is continuing on the trajectory started in 2014, in which they led the world in clean energy investments, according to Bloomberg. With significant financial backing and a strong economic investment in the deal, China is well positioned to make an impact through their partnership with Russia through 2021, as they carry out the expectations of this agreement.

2017-06-19T14:52:47+00:00 March 11th, 2016|China|0 Comments

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