The View | From Russia, with trepidation: will China sign a new gas deal to feed its energy needs?
- The Ukraine war is complicating the calculus of China’s energy security and the prospect of a new energy deal with Russia
- Can Beijing afford to be close to a Moscow that is increasingly politically and economically isolated?
Two recent developments reveal the possibility of a new energy agreement between China and Russia. First, Russian gas giant Gazprom PJSC announced a contract to design the Soyuz Vostok pipeline across Mongolia towards China. Second, Beijing is reported to be discussing with its state-owned companies opportunities to buy stakes in Russian energy companies, and is also looking at a Power of Siberia 2 pipeline to China.
However, even as domestic, regional and global factors may push China towards a new energy deal with Russia, Beijing could also face a range of challenges.
Russian gas exports – whether liquefied natural gas or pipeline gas delivered through the original Power of Siberia, for example – would help China reduce greenhouse gas emissions as the country makes a green transition.
Secondly, the withdrawal of Western energy companies such as BP and Shell from Russia due to the Ukraine war creates opportunities for Chinese energy companies, especially state-owned ones, to invest in Russia and diversify their portfolio.