Russia’s Gazprom Neft signals shift away from US dollar payments in China
- Chinese currency being used for some jet fuel settlements, firm’s chief executive says
- Shift to local currencies part of bigger response to US sanctions, analyst says
Alexander Dyukov, chief executive of Gazprom Neft, the oil arm of Russian gas giant Gazprom, said on Friday that the company had started using the yuan in China for aviation fuel settlements.
At the Eastern Economic Forum in the Russian city of Vladivostok, Dyukov said a deal had been reached with China’s national jet fuel operator to start the shift from September and the terms could apply to all the settlements by the end of this year.
Chinese airlines could also soon use roubles to buy jet fuel at Russian airports, he said.
Gazprom Neft is the third-biggest oil producer in Russia and operates at 34 airports in China.
China’s yuan internationalisation faces coronavirus, geopolitical threats despite record cross-border use
“It can expand the international influence of the yuan and the rouble … and help resist the external risks of sanctions,” Yang said.
He said the yuan and the rouble were expected to be used in more areas of trade, and the fuel settlements were part of efforts to expand cooperation, particularly in energy.
“Aircraft fuelling is within the scope of energy cooperation. Settlement in local currencies avoids the complicated procedures of settlement in other currencies, making transactions more convenient, and can also reduce costs to expand the total trade volume,” he said.
China’s yuan internationalisation strategy needs ‘persistent, strong foreign demand’
The US dollar’s share of trade between Russia and China fell below half for the first time on record in the first quarter of 2020, and again in the fourth quarter last year, with more than three-quarters of the transactions between the two countries now conducted in the euro, according to Russia’s central bank.
Despite a slight decline in 2020, trade between China and Russia has been over US$100 billion for three consecutive years. Energy trade also saw robust growth with Russia becoming a top energy supplier for China, according to official data.
During a trip to China in March, Russian Foreign Minister Sergey Lavrov called on Moscow and Beijing to reduce their dependence on the US dollar and Western payment systems.
The two countries are also forging stronger bonds in the military, technology, and aviation.
Addressing the Vladivostok forum by video link on Thursday, Chinese President Xi Jinping said China and Russia would strengthen strategic coordination and advance bilateral practical cooperation.
Chinese ambassador to Russia Zhang Hanhui said the two countries would also expand cooperation throughout the Far Eastern territories.
