China Strengthened Energy Ties With Russia Through Oil and Gas Purchases in 2022
(Reuters) - 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.
Russia and China’s Energy Ties, Explained
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.
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