China and Russia sign new deals on energy cooperation

China and Russia announced a significant strengthening of cooperation in energy sector, with major oil and gas corporations from two nations signing new deals this week.

While China is massively expanding its renewable energy capacity to meet its 2030 and 2060 climate goals, natural gas is likely to remain a significant energy transition fuel for China.

In 2021 China became the world’s largest importer of Liquified Natural Gas (LNG), overtaking Japan. The country aims for a growing portion of its power and heating needs in the intermediate term to shift from coal to natural gas, as a cleaner-burning fuel.

China’s President Xi Jinping called for efforts to strengthen the strategic partnership in energy between China and Russia during a meeting with Russian President Vladimir Putin in Beijing on Friday, 4 Feb 2022.

The Chinese President said the two sides should steadily advance major oil and gas cooperation projects and strengthen joint innovations in major energy technologies, adding that both countries should support each other in ensuring energy security.

Gas-distributing and compressing station of the China-Russia east-route natural gas pipeline in the city of Heihe, the first stop after the Russia-supplied natural gas enters China, northeast China’s Heilongjiang Province. 

China-Russia energy cooperation has advanced over the years. In 2011 and 2018, the first and second lines of China-Russia crude oil pipelines were successively put into commercial operation. These lines have since enabled a capacity of 30 million tonnes of crude oil to be imported into China each year.

In 2019, the China–Russia East-Route natural gas pipeline went into operation, setting a new milestone for energy cooperation between the two countries.

The two new major Sino-Russian energy deals signed this week are:

  • China National Petroleum Corporation (CNPC) and Russia’s Gazprom signed a long-term sales and purchase agreement for natural gas to be supplied via the Far Eastern route on Thursday 3 Feb 2022.

The signing of this document is an important step towards further strengthening the mutually beneficial cooperation between Russia and China in the gas sector, Gazprom said in a press release.

Once the project reaches full capacity, the volume of Russian pipeline gas supplies to China will grow by 10 billion cubic meters, totaling 48 billion cubic meters per year.

“It is indicative of the exceptionally strong mutual trust and partnership between our countries and companies,” said Alexey Miller, Chairman of Gazprom, the Russian energy giant.

  • Russian oil producer Rosneft also signed a deal with CNPC on Friday 4 Feb 2022 to supply a total of 100 million tons of oil through Kazakhstan over 10 years and the crude oil will be processed at factories in northwest China to meet the country’s needs for petroleum products.

Last year, Russia replaced Qatar to became China’s third largest gas supplier, and it is also China’s No.2 crude oil supplier.

The Russia and China have also cooperated closely in nuclear energy. Last year, Xi and Putin witnessed the groundbreaking ceremony of a bilateral nuclear energy cooperation project, Tianwan nuclear power plant and Xudapu nuclear power plant.

Unit 5 of the joint Russia-China Tianwan nuclear power plant in China’s Jiangsu province entered commercial operation in Sept 2020, to become China National Nuclear Corporation’s (CNNC’s) 22nd reactor in commercial operation (Image: CNNC).

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