China Prioritizes Buying Russian Fossil FuelsOct 23rd, 2017
Countries, the members of the Asia Pacific economic cooperation (APEC) are increasing the purchase volumes of hydrocarbons from Russia. This primarily concerns China the supply of which grew by 38.5 %, and the total sales to Asia Pacific customers increased more than by 33 %.
The Federal customs service of Russia (FCS) reports that the total commodity turnover between Russia and China over the past seven months amounts to nearly $ 50 billion, the highest figures since 2011. According to experts, China will continue to increase consumption of Russian oil thanks to the low logistical cost and the cheapness of the product compared to other suppliers.
Besides, Russia has increased exports to APEC by 33 %, while exports to the EU grew only by 27 %.
Surging prices for oil, gas and petroleum products provided the increase of sales revenue across the board to $ 90 billion. From January to July 2017, Russian exports to China are accounted nearly 45%. The increase in oil purchases from China led to the growth of trade turnover between the two countries which in seven months period grew by 136%. China is a premier buyer of oil across the globe. Since 2016, Russia has become the largest supplier of hydrocarbons for the Chinese industry. During this period, Russia sold China over 91 million tons of oil.
The main oil supplier is ROSNEFT, which annually pumps 35 million tons via ESPO pipeline and Kazakhstan. In addition to raw materials for which they agree to pay a high price, Chinese producers prefer oil to other energy sources because they receive favourable long-term contracts.
Despite the efforts of China to produce energy from alternative sources, they do not stop to invest much in Russian oil and gas and pipeline sectors, and according to analysts, the volume of investments will only increase.
Today, Beijing Gas holds a 20% subsidiary of ROSNEFT. The CEFC has contracted to purchase more than 14% of shares in ROSNEFT. In turn, ROSNEFT is gradually emerging to the Asia Pacific region in prospect entering the markets of India, Thailand and Indonesia.
High rates of economic growth in Asia and APEC are making them active consumers of petroleum products. For example, they expect China to increase imports of oil up to 450 million tons by 2030.