“The Russians want to do business with us Europeans. But the Kremlin and geopolitics are forcing them to look east… The big winner is China! » A few days before the start of the conflict in Ukraine, this European businessman involved in energy partnerships in Moscow looked like he was having bad days. It was in February, just after Vladimir Putin’s participation in the opening ceremony of the Beijing Olympics. Once again, the head of the Kremlin had staged his friendship with Xi Jinping, the Chinese president, for whom he confided that he had “personal vibes”.
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A friendship “solid as a rock” between the two countries, has just deceived Wang Yi, the Chinese Minister of Foreign Affairs. For twelve years, China has been Russia’s leading trading partner, supplying it with 16% of its oil (with an average of 1.59 million barrels delivered every day in 2021) but only 5% of its natural gas consumption, very far from the 40% in Europe.
“Polar Silk Road”
Beijing is however an ambivalent friend and is not fooled by the context in which Moscow makes advances to it. Chinese diplomats and businessmen make it pay through long negotiations. Major projects for new gas pipelines are underway, but their finalization is struggling. China will not be able to replace Europe quickly and easily.
However, it is already very present upstream in the entire energy chain, in particular in the great Kremlin project: the northern route, this polar sea route which, exploiting immense hydrocarbon reserves and offering new commercial prospects towards Asia, stoked Chinese interests. Beijing, which calls this Arctic project the “polar silk road”, has multiplied investments. In transport infrastructure (ports and… railroads, in order to connect to one of the branches of the Chinese Silk Road), but also
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Bank presence
Thus, with TotalEnergies, the Chinese are the main partners of Novatek, number two in gas in Russia, for its natural gas liquefaction plants in the Arctic. For the financing of Arctic LNG 2, a project estimated at more than 19 billion euros, they are present with CNOOC (10%) and CNPC (10%) – alongside TotalEnergies (10%) and the Japanese consortium Mitsui- Jogmec (10%). If Novatek is the majority with 60%, its partners for this megaproject are therefore above all Asian and not European. CNPC (with 20%) and the Chinese fund Silk Road (9.9%) were already shareholders of the first liquefaction plant of the Russian company, at a cost of 24.7 billion euros, on the Yamal peninsula .
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In recent weeks, banking relations have also intensified between Moscow and Beijing: Chinese establishments offer an escape in yuan to the Russians, prohibited from financing in euros or dollars because of Western sanctions. No information has been made public on the details of these bank loans. But it seems that the Chinese have made their support pay a high price…