Russia sees room for increased oil exports to China, and is pressing for cooperation in the LNG sector

Russia sees room to increase oil exports to China and deepen cooperation on liquefied natural gas supplies, Russian Deputy Prime Minister Alexander Novak said on Tuesday in Beijing.

China and India have been the main buyers of Russian oil since the start of Russia’s military campaign in Ukraine in February 2022. China imports about 1.4 million barrels per day of Russian oil by sea and about 900,000 barrels per day of Russian oil by pipeline.

Last month the US imposed sanctions on Russia’s two largest oil producers, Rosneft and Lukoil.

Russian President Vladimir Putin derided the sanctions, saying they would not have a significant impact on the Russian economy and emphasizing Russia’s importance to global markets.

There have been conflicting reports regarding the outlook for Russian oil supplies to China and India, while overall Russian crude oil exports have been relatively stable so far.

Novak told a China-Russia business forum in Beijing that Russia had discussed with Chinese partners the possibility of expanding oil exports to China.

“We see the prospect of increasing oil supplies via pipeline and sea,” he said.

He mentioned that the intergovernmental agreement provides for the possibility of extending the term of oil supplies to China via Kazakhstan until 2033.

He later met with Chinese Vice Premier Ding Xuexiang, 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 was quoted as saying at the meeting.

Ding, speaking at the same forum, called on the two countries to step up cooperation across the industrial chain, to ensure “safe and stable operation of cross-border energy channels”, and to maintain smooth energy trade, China’s Xinhua news agency reported.

Ding also proposed cooperation in the energy transition and renewable energy.

Russia has also cooperated with China in the production and export of LNG by sea.

China’s state energy giant CNPC has a 20% stake in Russia’s Yamal LNG plant, while China’s Silk Road Fund has a 9.9% stake in the Novatek-led project.

LNG exports from Russia are hampered by US sanctions against Ukraine, especially against the new Arctic LNG 2 plant, which significantly limits the use of tankers for fuel transportation.

China received its first LNG cargo from the sanctions-hit Russian project in late August, days before a meeting between Putin and Chinese President Xi Jinping.

Novatek, which is co-owned by some of Putin’s closest allies, has sold about 14 cargoes of LNG since August, with Chinese buyers receiving discounts of about 30% to 40%.

“Amidst external challenges, it is very important to continue, through joint efforts, to create the necessary conditions for the implementation of joint projects,” Novak said at the forum. Source: Reuters