ARKANSAS, Oct 15 (Future Headlines)- Since the initiation of the Ukrainian conflict, Russia, a significant global oil producer, has significantly reinforced its energy connections with China, the world’s second-largest oil consumer after the United States. Despite Western criticism of this growing partnership in light of Russia’s role in the Ukraine conflict, China maintains that these ties adhere to international norms, and it asserts its prerogative to collaborate with any nation of its choosing. Recent data from China’s customs authority highlights the accelerated growth of exports and imports between China and Russia in September compared to August, marking a notable deepening of their economic relationship.

The total value of bilateral trade in September reached $21.18 billion, the highest level since February 2022, when Russia initiated its military operation in Ukraine. Chinese Commerce Minister Wang Wentao emphasized that the economic and trade cooperation between China and Russia has strengthened and solidified under the “strategic guidance” of their respective leaders.

Russia exports approximately 2.0 million barrels of oil daily to China, representing over a third of its total crude oil exports. China stands as Russia’s second-largest purchaser of Russian oil, following India. Approximately 40% of these oil supplies traverse the 4,070-km (2,540-mile) East Siberia Pacific Ocean (ESPO) pipeline, which was financed by Chinese loans estimated at $50 billion.

From January to September, Russia provided 1.3 million barrels per day (bpd) of seaborne crude to China, and China imported about 800,000 bpd of ESPO crude via pipelines. The seaborne imports predominantly consist of ESPO oil shipped from Russia’s Pacific port of Kozmino, along with Urals oil from the Baltic Sea.

Total Russian shipments from January to September increased by over 400,000 bpd compared to the previous year, led by Urals crude. China has saved $4.34 billion this year by importing Russian oil, calculated based on the monthly price differentials between ESPO and Tupi crude from Brazil, as well as Urals versus Oman.

Russian pipeline natural gas exports to the European Union are forecasted to decrease to 21 billion cubic meters (bcm) this year, nearly two-thirds lower than the previous year and a more than six-fold drop from 2021, according to a projection by the Russian state bank VEB.

This level is below the expected 22 bcm to be supplied to China via the Power of Siberia pipeline this year, signifying that Russia’s pipeline gas exports to China will exceed its gas exports to Europe for the first time.

The main gas export route for Russia is the 4,000-km (2,500-mile) Power of Siberia pipeline, connecting East Siberian fields to northeastern China. Gas supplies via the Power of Siberia pipeline commenced in late 2019 and are set to rise to 38 bcm per year by 2025 under a 30-year contract worth over $400 billion.

Russia’s ambition is to construct a second gas pipeline to China, Power of Siberia 2, with a capacity of 50 bcm per year to run through Mongolia. However, discussions about prices and other route-related issues have not yielded concrete results so far.

During President Vladimir Putin’s visit to China in the previous year, a 30-year contract was established to supply 10 billion cubic meters of gas annually to China via a new pipeline from the Russian island of Sakhalin.

Russia’s Novatek aims to rival Qatar as the world’s largest LNG producer in the coming decades, with the involvement of Chinese companies, including CNPC, in its Yamal LNG and Arctic LNG-2 projects. Russia may supply up to 10 million tons of liquefied natural gas (LNG) to China this year out of a total of 33 million tons of LNG produced in Russia.

In summary, the deepening energy collaboration between Russia and China is driven by various strategic initiatives, particularly in oil and natural gas. These joint ventures have resulted in substantial energy exchanges and have the potential to significantly shape the global energy landscape. China’s willingness to strengthen its energy ties with Russia, despite international scrutiny, underscores the evolving dynamics of energy diplomacy in the 21st century.

Reporting by Sarah White