June 2023
Russian-Chinese alliance in the energy sector, and how it has evolved since the invasion of Ukraine
Author: Anastasiya Shapochkina
Editor: Velina Tchakarova
Editor: Velina Tchakarova
Introduction
As a result of Russia's invasion of Ukraine, a new dynamic of alliance between Russia and China has manifested itself that could upset the balance of power in the Eurasian area and beyond.
In an attempt to limit its growing isolation on the international stage in the face of Western sanctions, Russia has increasingly turned to China as an economic, financial, technology and military partner since the 2014. Beijing in turn seeks to adopt a delicate posture of balance in the face of the war, reassert its strategic autonomy and preserve its business and diplomatic ties with the West, while taking advantage of Russia's economic isolation and using it as a means to increase its own geopolitical influence.
This report explores Russia-China relations in the energy field, focusing on oil and natural gas.
After planting the historic and geopolitical landscape, Part 1 analyses the place of China in the Russian energy strategy. It explains the development of Moscow’s “pivot to the East” through oil and gas projects, from when Russia still calibrated its influence as “energy superpower” at the ESPO pipeline launch in 2009, to the Chinese investment in Russian LNG projects from 2013, to the launch of the first direct natural gas pipeline construction in the wake of Crimea annexation and the first Russian invasion in the east of Ukraine in 2014. Part 1 proceeds to examine the efficacy of Western sanctions on Russia, focusing on oil embargo and price cap, how the sanctions have reshaped Russian oil export markets, and how they may be working, despite many faults. It evaluates the importance of China for Russia and vice versa from the natural gas market perspective, the consequences of the invasion of Ukraine for Gazprom, and the evolving prospects of Russian LNG. It concludes with scenarios and recommendations.
In an attempt to limit its growing isolation on the international stage in the face of Western sanctions, Russia has increasingly turned to China as an economic, financial, technology and military partner since the 2014. Beijing in turn seeks to adopt a delicate posture of balance in the face of the war, reassert its strategic autonomy and preserve its business and diplomatic ties with the West, while taking advantage of Russia's economic isolation and using it as a means to increase its own geopolitical influence.
This report explores Russia-China relations in the energy field, focusing on oil and natural gas.
After planting the historic and geopolitical landscape, Part 1 analyses the place of China in the Russian energy strategy. It explains the development of Moscow’s “pivot to the East” through oil and gas projects, from when Russia still calibrated its influence as “energy superpower” at the ESPO pipeline launch in 2009, to the Chinese investment in Russian LNG projects from 2013, to the launch of the first direct natural gas pipeline construction in the wake of Crimea annexation and the first Russian invasion in the east of Ukraine in 2014. Part 1 proceeds to examine the efficacy of Western sanctions on Russia, focusing on oil embargo and price cap, how the sanctions have reshaped Russian oil export markets, and how they may be working, despite many faults. It evaluates the importance of China for Russia and vice versa from the natural gas market perspective, the consequences of the invasion of Ukraine for Gazprom, and the evolving prospects of Russian LNG. It concludes with scenarios and recommendations.