By Lu Nanquan
Sino-Russian energy co-operation entered a new phase during
Russian President Vladimir Putin's visit to China in March. During
his trip, a package of agreements and protocols on energy
co-operation were signed. In addition, the China-Russia joint
communiqu defined the two countries' energy co-operation as a vital
aspect of their strategic co-operative partnership.
There are a number of reasons for this increasingly close
co-operation.
First, Russia enjoys abundant energy resources and is the
world's leading exporter of energy resources, while China is the
world's second-biggest oil consumer and the second-largest
petroleum importer.
These factors constitute the basis of Sino-Russian energy
co-operation.
Second, the world's energy exporters are trying to diversify the
recipients of their supplies. At the same time, energy-importing
nations are also seeking to diversify their suppliers. Both sides
are seeking greater energy security.
In the case of Russia and China, the two countries are each
other's biggest neighbor. These geographic advantages are
multiplied by the fact that China has a massive demand for
energy.
In addition, Russia's energy exporting strategy is tilting
eastwards.
Russia's energy resources, particularly its petroleum and
natural gas, give the nation a great deal of diplomatic
leverage.
Realizing that a single export destination is not in Russia's
long-term interests, the nation has been trying to diversify its
export destinations. Looking eastward partially reflects this shift
in Russia's energy exporting strategy.
Some Russian researchers, for example, maintain that the nation
could free itself from its dependence on a single export
destination if its natural gas exports to Asia could account for 20
to 30 percent of its total export and it got tougher in
negotiations with European importers.
Apart from this, Asia is one of the most economically dynamic
areas in the world today. Strengthening energy co-operation with
this region, including China, is of great economic significance for
Russia.
Overall, Russia's shifting of its energy exporting focus to Asia
is by no means an economic expediency. Instead, it is based on
long-term strategic calculations.
Sino-Russian energy co-operation is not limited to oil. It also
includes natural gas, electricity and nuclear energy.
For example, a memorandum of understanding was signed during
Putin's China visit between the China Petroleum and Natural Gas
Group and Russia's Natural Gas Corp Ltd on Russia supplying gas to
China. According to the agreement, Russia will start supplying 30
to 40 billion cubic metres of natural gas yearly to China from
2011, via two trans-Siberian pipes.
This Russian gas will cross the border at China's Xinjiang Uygur Autonomous Region, and will
eventually be incorporated into the country's grand undertaking of
sending natural gas from the country's energy-rich west to the
economically prosperous east. Senior Russian officials have also
suggested that the two countries could embark on joint ventures on
the continental shelves under the Russian jurisdiction to produce
liquefied natural gas.
The two countries are also considering co-operation in power
supply projects. This co-operation will take place in three
stages.
First, electricity will be transmitted from Russia's Far East to
China's Heilongjiang Province by 2008, with an annual
volume of 3.6 to 4.3 billion kilowatt-hours.
Second, China's Liaoning Province will receive 16.5 to 18
billion kilowatt-hours of Russian electricity annually by 2010.
Third, the whole of Northeast and North China will receive
Russian electricity by 2015. By then, China will receive 30 billion
kilowatt-hours of electricity from Russia's Far East.
The nuclear power sector is also a venue for Sino-Russian energy
co-operation. China plans to build at least 30 nuclear plants over
the next 15 years, and Russia is ready to take an active part in
this massive undertaking.
As a matter of fact, Russian nuclear power corporations are
bidding for the construction of nuclear reactors in China,
competing with such global players as US firm Westinghouse.
The laying of oil pipelines is already on the agenda. Once the
first-phase construction of Russia's Far East oil pipeline, which
broke ground in April, is completed, a branch line to China is
likely to be built, which this author believes could send 30
million tons of crude oil to China annually.
Taking into account the twists and turns regarding construction
of the oil pipeline over the past few years, the uncertainty felt
by some Chinese is quite justified.
While refraining from blind optimism, we have no reason to be
pessimistic because the prospects for Sino-Russo energy
co-operation are extensive.
The author is a researcher with the Institute for Russia,
East Europe and Central Asia Studies under the Chinese Academy of
Social Sciences.
(China Daily July 6, 2006)
