Western sanctions force Russian firms to look to Hong Kong and East Asia

The pressure of Western sanctions on Moscow is pushing the flow of Russian money, companies and energy firms to China and Hong Kong.

The Russian banking sector, which traditionally looked to London for partners and investors, has started eyeing Shanghai, Singapore and Hong Kong, said Simon Cheung, chief Hong Kong representative of International bridge for Co-operation, Development & Investments (ICDI), which is partly owned by a Russian state-owned firm, Russian Venture.

"Hong Kong could potentially replace London as the first destination for the Russian companies to conduct fund raising and financial activities," he said.

This was underscored when Russian President Vladimir Putin told Vice-Premier Zhang Gaoli that Rosneft, the biggest Russian state-owned oil company, would invite Chinese firms to take a stake in Rosneft's Vankor project, a report said. Vankor, the second-biggest oil project in Russia, produces 440,000 barrels per day.

Zhang and Putin presided over the launch of the construction on the 4,000 kilometre "Power of Siberia" pipeline, being built by Russian state-owned energy firm Gazprom, which will start sending Russian gas to China in 2019, the media reports said.

In May, Gazprom and China National Petroleum Corp (CNPC), China's biggest state-owned energy firm, signed a US$400 billion deal to ship nearly 40 billion cubic metres of gas to China annually over 30 years.