International political changes may lead the Chinese Communist Party to think more about the security of its own energy supply lines. Some analysts believe that this could provide a good opportunity for Russia’s energy diplomacy against the CCP. Russia continues to step up its new energy projects for the Communist Party, including a gas pipeline through Mongolia.
Former Prime Minister: Russia and China enter new phase of gas cooperation with new energy projects
Former Russian Prime Minister and current Chairman of the Board of Directors of energy giant Gazprom Zubokov told local media in late April that the Siberia-1 gas pipeline connecting Russia and China, which will begin to flow at the end of 2019, is the largest energy cooperation project between the two sides, and that the two countries are currently discussing new energy cooperation projects. In addition, Russia is grateful that the Chinese Communist Party is strictly fulfilling some of the energy contracts signed by the two sides.
Zubokov was particularly optimistic about the future of the Chinese gas market. He said that despite the impact of the epidemic, China’s gas consumption grew last year. China is now the world’s third largest consumer of natural gas after the United States and Russia, and the world’s largest importer of natural gas.
Zubokov said that cooperation in the gas sector is entering a new stage, with Russian gas exports to China growing every year, and that Russia is ready to meet this demand in the face of strong gas demand in the Chinese market.
China is Russia’s main trading partner and energy still plays an important role
The former head of the Russian government also highlighted the fact that Russia’s foreign trade is increasingly tilted to the East. China has become one of Russia’s largest trading partners. And revitalizing the Far East remains a top priority for Russia.
Russian media a few days ago cited just-released statistics from the Chinese Communist Party’s customs office, saying that Russia’s trade with China has continued to grow for several months. Some Russian experts on China who follow trade between the two countries say that China is now Russia’s largest trading partner, not counting the European Union. If the EU is included, China is Russia’s second largest trading partner after the EU.
According to them, the analysis of Russian-Chinese trade in recent years is characterized by a slow and gradual decline of the EU’s share in Russia’s foreign trade and an increase of China’s share. Although Russian agricultural exports to China have grown significantly in recent years, energy still accounts for a huge share in the structure of Russian exports to China.
Challenges to the security of China’s energy supply lines
At the same time, Russia’s thinking on energy cooperation with the Chinese Communist Party has begun to change due to geopolitical influences. The current political turmoil in Myanmar and the future situation in Afghanistan after the withdrawal of US and NATO troops is very uncertain. In this situation, for oil and gas pipelines entering China from Myanmar and natural gas pipelines entering Xinjiang from neighboring Afghanistan in Central Asia, these energy pipelines may be subject to more security factors in the future.
Some Russian analysts of strategic issues believe that the direction of the situation in Afghanistan will affect Central Asia. And while China’s influence in Central Asia is growing, it is primarily in the economic sphere. As all sides pay more attention to security issues, Russia, which has long played a key role in this area, will further increase its position in Central Asia. China is likely to be even more in demand from Russia in the future.
Russian Defense Minister Shoigu visited Tajikistan and Uzbekistan, which are neighbors of Afghanistan, a few days ago. When Russian President Vladimir Putin met with visiting Tajikistan President Rahmon in Moscow on May 8, both sides also mentioned the impact of the political situation in Afghanistan on the region. The energy pipelines from Central Asia to Xinjiang both transit Tajikistan and Uzbekistan. Another transit country, Kyrgyzstan, has also been politically unstable in the last year.
Russia sees opportunity, doesn’t want to let go
Some Russian energy analysts say Russia’s energy exports to China via pipelines are becoming one of the safest ways to be particularly competitive in the new international situation. This is because China’s maritime energy transportation routes and other ways of importing energy are subject to military conflicts, natural disasters and various other impacts and can be cut off. Therefore, Russia’s pipeline energy, along with the security factor, has become a major new selling point in Moscow’s energy cooperation with Beijing.
According to energy market analyst Alexandrov, the Russian energy pipeline to China has two main features: security and reliability.
Alexandrov: “By relying on the Russian energy pipeline, China will thus have access to a huge and, above all, very reliable supply of energy. Another added advantage on top of that is that the two sides can plan for another steady boost in supply for a long time to come.”
A report published late last year by the Carnegie Moscow Center said that after oil, China is working to diversify its sources of natural gas imports. And Russia can use the changing international situation to its advantage. For China, pipeline gas from Russia then becomes the most secure and stable source of energy supply, independent of geopolitical turmoil.
The report also argues that China has been buying large volumes of LNG from Australia for a long time in the past, but in the future LNG purchases from Australia will be lower. China has now become the largest foreign investor in Russian Arctic LNG projects.
Putin and Mongolia positive enthusiasm China lukewarm but attitude may change
Russian President Vladimir Putin is pushing hard for the Siberian-2 gas pipeline project to China via Mongolia, with the technical demonstration and design of the project expected to be completed by the end of this year. The capacity of the pipeline through Mongolia is also planned to be much higher than the Siberian-1 pipeline, which is already connected to gas.
The gas pipeline project through Mongolia has been under discussion for several years. In addition to Russia, Mongolia is also very active. This is because the pipeline would bring significant transit revenues to Mongolia as well as supply Mongolia with natural gas energy. The use of Russian gas could help solve the problem of environmental pollution caused by the heavy use of coal by the population during Mongolia’s long winters.
In contrast to the enthusiasm of Russia and Mongolia, Chinese Communist Party officials have so far remained unresponsive and silent on the trans-Mongolian gas pipeline project. There has been equally little discussion and reporting on the project in the Chinese media.
There is a precedent for the Putin regime to use energy as a weapon against European buyers and neighbors in the past. Years ago, Russia cut off gas supplies to Europe during the harsh winter and New Year holidays, which dealt a blow to Russia’s image and credibility as a reliable energy supplier. Building another gas pipeline to China via Mongolia would mean that in addition to China’s deepening dependence on Russia for its gas supplies, it would likewise be subject to Mongolia, which is heavily influenced by Russia. However, some analysts believe that changes in the international political situation may also prompt China to change its attitude in favor of the Mongolian transit pipeline project.
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