HomeMediaLatest News"Not always together, but never against"

"Not always together, but never against"

14 February 2022

Salikhov Marcel R. President, Principal Director on Economic Studies, Head of the Economic Department

Marcel Salikhov, President of the Institute for Energy and Finance, commented to the business weekly "Expert" on the agreements between Russia and China in the field of energy, reached at the negotiations on the 4thof February.

An unequivocal rejection of American global dominance, neat foreign policy curtsies and modest economic agreements are the dry residue of the summit talks in Beijing.

Oil: growth potential, secure logistics

A significant part of Russian oil supplies to China is covered by our industry leader Rosneft. Last year, it delivered 50 million tons of oil to China, including 40 million tons under three long-term contracts with China's leading state-owned oil and gas company CNPC. In 2023, one of the contracts with CNPC for the supply of 10 million tons via a transit route through Kazakhstan expires, and the new contract, signed on February 4 in Beijing, contains obligations to supply the same volumes of oil (10 million tons annually) for the next ten years.

“The current capacity of this pipeline, 20 million tons per year, is clearly excessive for Kazakhstan’s own supplies to China, which have been steadily declining in recent years, so the transit of Russian oil is a profitable solution for all parties: Russia, China and Kazakhstan,” Marcel Salikhov, president of the Institute for Energy and Finance believes.

Gas: old and new pipeline projects

“The main constraint for expanding gas supplies to China is not competition with other suppliers, but primarily competition with domestic shale gas production,” Marcel Salikhov said. — China has set ambitious targets to increase its own production, which have been rather poorly met. For example, shale gas production in 2020 exceeded 21 billion cubic meters, but never reached the 13th Five-Year Plan target of 30 billion cubic meters. The Chinese authorities are counting on a major breakthrough in the development of the shale industry during the 14th Five-Year Plan (2021-2025), but the possibility of this remains unclear. Another zone of uncertainty is the prospects for the development of the production of low-carbon gases (biomethane, biosynthetic methane, hydrogen and low-carbon synthesis gas), which are also supported by the Chinese authorities. The obvious priority for the PRC is its own resources, not imports.”

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