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China and Russia may set up energy alliance, Moscow’s top envoy says

  • Ambassador in Beijing Andrey Denisov also hails military cooperation between the two countries
PUBLISHED : Wednesday, 12 December, 2018, 11:00pm
UPDATED : Thursday, 13 December, 2018, 6:29pm

China and Russia are looking into setting up an energy alliance, Moscow’s top envoy to China said on Wednesday, as they seek closer ties amid growing pressure from the United States.

Speaking in Beijing, Russian ambassador to China Andrey Denisov also hailed military cooperation between the two countries over the past year. He highlighted Vostok 2018 in September, Russia’s biggest war games in nearly 40 years that involved almost 300,000 Russian troops and 3,000 from China, saying it “reflected the high-level mutual trust on politics”.

“Given the large scale of the exercise, it’s difficult to make it regular, but normal military contact will continue,” Denisov said.

Russia, under sanctions over its annexation of Crimea and the alleged attempted murder of a former spy and his daughter in Britain, has been edging closer to Beijing in recent years, raising suspicions in Washington.

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Denisov said trade between the two neighbours was expected to reach US$110 billion this year – about 70 per cent of which was from energy.

“Russia is willing to work with China on long-term and stable supply cooperation in the energy industry,” Denisov said at the embassy’s annual press conference. “If China partners with Russia, [both sides will] benefit from healthy development in bilateral ties and establish a security network [on energy].”

Facing severe air pollution from burning coal and a growing dependence on imports for its energy supply, Beijing has been seeking to buy more from Russia – one of its top suppliers of crude oil and natural gas.

As part of those efforts, an extension of the East Siberia-Pacific Ocean oil pipeline between Russia and China went into operation in January, doubling the export volumes from 15 to 30 million tonnes a year – or almost 220 million barrels, Denisov said.

Meanwhile, a 3,000km pipeline – seen as Russia’s most ambitious, costly and geopolitically critical energy project since the fall of the Soviet Union – is expected to start pumping 38 billion cubic metres of gas a year from eastern Siberia to eastern China from next December, he said.

Li Lifan, an associate professor at the Shanghai Academy of Social Sciences, said energy cooperation with China was part of Russian President Vladimir Putin’s Asia pivot, as Moscow sought to diversify its market because of Western sanctions limiting its options in Europe.

In addition to the gas pipeline running from eastern Siberia, Beijing and Moscow are also negotiating over a western route that would supply 30 billion cubic metres of Russian gas annually to China.

“Talk of an energy alliance could be a sign that the western route deal may be wrapped up very soon,” Li said.

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The Russian ambassador’s remarks come as Beijing and Washington are locked in a trade war, with China imposing a 10 per cent tariff on US liquefied natural gas (LNG) imports in September after US President Donald Trump announced punitive tariffs on US$200 billion of Chinese imports.

China has since agreed to start importing more US agricultural, energy, industrial and other products, according to the White House. But Li said it remained uncertain whether LNG – a market now dominated by Qatar and the United States – would be on Beijing’s US shopping list.

“Importing natural gas from Russia could also impact the price of American LNG, because pipeline gas is relatively cheap – and as China is a key importer of LNG in east Asia, this could also further suppress the price of LNG,” Li said.