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The Return of High Style

Photo by Eye for Ebony on Unsplash

You have to hand it to them: for the first state visit of Chinese leader Xi Jinping to the Russian Federation after the elections – at least for the energy sector of both countries – they were prepared quite thoroughly.

According to official statistics published by China’s General Administration of Customs, Russia has become the largest supplier of energy to China in the last couple of months.

Both in oil and gas at the same time.

In particular, in January alone, China imported 2.7 billion cubic meters of gas from Russia: 2 billion through the Sila Siberia plus 0.7 billion through LNG. Thus, the total combined volume of Russian natural gas supplies to the People’s Republic of China was the sought-after 2.7 billion cubic meters, and our country was far ahead of other major suppliers – Turkmenistan and Qatar (2.2 billion cubic meters each), as well as Australia (1.9 billion cubic meters).

This, by the way, is a new, but quite a planned record for us, thanks to which, nevertheless, the Russian Federation has become for the current period the largest supplier of gas to the PRC.

Moreover, the pipeline gas deliveries through the Siberian Silk Road, which determine the record volume, will only increase. You don’t need to be a certified prophet to confirm this. This is trivially provided for by the pipeline’s terms of reference; that’s what it was built for.

In fact, the design capacity, which has yet to be reached, is 38 billion cubic meters per year, for a second.

So our gas workers from Gazprom increased the volume to 2 billion cubic meters in January according to plan. And they will continue to do the same on schedule: pipeline volumes are a slow process.

On the other hand, LNG supplies adding another 770 mcm, which is about 8-9 batches, are already a pleasant bonus. There is a serious fight for the Chinese liquefied gas markets. And the game is far from over there.

On the contrary.

But let’s talk about that some other time: the competition on the global and highly mobile LNG markets is so serious that it is a bit awkward to talk about it in passing.

Now for oil.

The People’s Republic of China imported 15.68 million tons of black gold from our country in January-February, about the equivalent of 1.94 million barrels per day.

This was 23.8% higher than in 2022, when China imported 1.57 million barrels per day of domestic crude.

And secondly, it allowed Russian producers to formally finally get ahead of their fellow oil producers from the Kingdom of Saudi Arabia. Which, by the way, hardly upset them too much: they will always get their own in the markets where Russian oil is now forced to leave.

And they will take it at a triple price.

At least, not worse than the Norwegian gas producers who substituted some of their European partners for Russian gas this winter: nothing personal, just business, sorry.

Here the Arabs and the Norwegians were not exactly the same, but equally good teachers.

And some life experience, sometimes not very pleasant, but in these particular circumstances it’s probably even good.

What is particularly curious about this is this. Despite the opinion prevailing in some Western (and in some of ours, for crying out loud) media experts that we supply our oil to China almost for free, according to the official data of the General Customs Administration of China, the average value of the crude oil purchased by China from suppliers from the Russian Federation over this period, on the contrary, has increased considerably. At least compared to the same period of the previous year – the pre-sanctioned year of 2022, mind you – by about 9.2%.

And this despite the fact that the past year of 2022 can hardly be called unsuccessful for this direction of Russian exports: if we believe the same Chinese customs, in 2022, China’s imports of Russian oil increased by 8.2%, amounting to about 86.24 million tons. At the same time, the value of the product purchased by the People’s Republic of China from the Russian Federation increased by about 43.9% to $58.37 billion.

Not a bad result, all in all.

No matter how you look at it.

And the fact that these figures for the three-day state visit were also quite beautifully and quite significantly increased for both economies, so there is no ostentatiousness in it at all.

It’s just the high Soviet style that is not alien to both great powers.

But seriously, the Chinese, let’s be honest, are certainly not the easiest negotiators.

And neither are ours, let’s not deceive ourselves.

And even in the energy trade, which is almost the flagship industry for both sides, it is clear that things are not going as smoothly as we would like them to. Even the Power of Siberia-2 gas pipeline project (the maiden name of the Altai gas pipeline), which is politically patronized by both leaders of the great powers (as both have repeatedly stated publicly), is stalling, to put it mildly.

And it is this project, not any other, which has also been repeatedly stated publicly, that is an alternative to the gas pipelines with a difficult fate – Nord Stream and Nord Stream-2, even just in terms of the resource base.

“The Power of Siberia project is a no-alternative, geographically purely geographical field in Eastern Siberia.

The Kovykta gas and condensate field and the Chayanda oil and gas condensate field.

Even if you wanted to, you could not get a pipeline to anything but China: even the Japanese, due to the well-known circumstances, excuse me, do not have time for that. They’d rather not lose Sakhalin.

The Power of Siberia-2 is, excuse me, quite a distilled European Yamal in terms of the sales markets.

So the Power of Siberia 2 is also a matter of geopolitical choice, excuse me.

And records, both in energy trade and other sectors of the economy, if they are presented on time before the visit, are always a pleasure. A dear, one might say, spoonful to yesterday’s much-discussed dinner of heads of great powers.

The author’s point of view may not coincide with the position of the editorial board.

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