According to Reuters article published on March 20, 2023, China has increased purchases of Russian oil and gas in the year since Russia invaded Ukraine and the energy relationship between the two countries will be an important topic when presidents Vladimir Putin and Xi Jinping meet in Moscow this week.
Here are some facts about their energy ties.
- Russia's Gazprom supplies gas to China through a 3,000 km (1,865 mile) pipeline called Power of Siberia under a 30-year, $400 billion deal launched at the end of 2019. In 2022 exports amounted to about 15.5 billion cubic meters (bcm). They are planned to increase to 22 bcm in 2023 and reach full capacity of 38 bcm by 2027. In February 2022, China also agreed to buy up to 10 bcm of gas annually by around 2026 via a pipeline from Russia's far east island of Sakhalin. Russia's gas exports to China are still a small fraction of the record 177 bcm it delivered to Europe in 2018-19. Since the start of the Ukraine war in February 2022, volumes to Europe have shrunk, reaching about 62 bcm in 2022.
- Putin, Xi and the president of Mongolia held talks in September 2022 on a proposed new Power of Siberia 2 pipeline capable of delivering 50 bcm of gas per year from Russia to China via Mongolia. Moscow put forward the idea many years ago, but it has gained urgency as Russia turns to China to replace Europe as its major gas customer.
- Russia remained China's second-largest source of crude oil in 2022, after Saudi Arabia, as Chinese refiners snapped up low-cost Russian barrels shunned by Western countries shunned them after the invasion of Ukraine. Reuters' calculations suggest China may have saved some $5 billion last year through these discounts.
- China's crude oil imports from Russia jumped by 8% in 2022 to 86.25 million tonnes, equivalent to 1.72 million barrels per day (bpd), while its imports from the United States fell 31% to 7.89 million tonnes, Chinese customs data showed.
- China receives about 35% of the oil it buys from Russia via the Skovorodino-Mohe pipeline spur of the 4,070-km (2,540-mile) East Siberia Pacific Ocean (ESPO) pipeline, thereby bypassing any vessel and freight restrictions.
- China's seaborne imports of Russian oil are set to hit a record in March as Chinese refiners take advantage of cheap prices as domestic fuel demand rebounds.
- China has largely ignored the sanctions imposed by Western nations on seaborne Russian crude since Dec. 5.
- Russia exported some 3.8 million tonnes of ESPO Blend crude oil from the Far East port of Kozmino in January 2023, a record monthly high for the port. The exports were sold above the Western price cap of $60 per barrel, market sources said.
- Russian oil export revenues were expected to rise in March as falling freight rates and strong demand in China and India push Russian oil prices towards the $60 per barrel Western price cap, based on traders' and Reuters' calculations, challenging the view that the mechanism is increasing pressure on Moscow. But the biggest weekly slide in oil since December will likely offset Russia's possible gains from lower freight costs and stronger Russian crude differentials to global benchmarks.
- At least four Chinese-owned supertankers are shipping Russian Urals crude to China, Reuters reported in January. An executive with the Chinese firm involved in the shipments estimated a total of 18 Chinese supertankers and another 16 Aframax-sized vessels could be used for shipping Russian crude in 2023, enough to transport 15 million tonnes a year or about 10% of total Urals exports.
