• 4 minutes Oil Price Could Fall To $30 If Global Deal Not Extended
  • 7 minutes Middle East on brink: Oil tankers attacked off Oman
  • 11 minutes CNN:America's oil boom will break more records this year. OPEC is stuck in retreat
  • 14 minutes The Latest: Iranian FM Says US Cannot Expect To ‘Stay Safe’
  • 9 mins The Pope: "Climate change ... doomsday predictions can no longer be met with irony or disdain."
  • 2 hours Ireland To Ban New Petrol And Diesel Vehicles From 2030
  • 8 hours US Shale Drilling lacks regulatory body.
  • 3 hours Solar Panels at 26 cents per watt
  • 3 hours Trudeau approves Trans Mountain Pipeline
  • 37 mins Venezuela's Maduro sneaks $300 million of gold out of country to Africa.
  • 6 hours Huge UK Gas Discovery
  • 1 hour The Plastics Problem
  • 8 hours OPEC, GEO-POLITICS & OIL SUPPLY & PRICES
  • 14 hours Why Is America (Texas) Burning Millions of Dollars Per Day Of Natural Gas?
  • 14 hours The Magic and Wonders of US Shale Supply: Keeping energy price shock minimised: US oil supply keeping lid on prices despite global risks: IEA chief
  • 7 hours Malaysia Oil & Gas Updates
  • 35 mins Coal Boom in Asia is Real and a Long Trend
  • 19 mins Fareed Zakaria: Canary in the Coal Mine (U.S. Dollar Hegemony)

Breaking News:

Oil Stabilizes On Small Crude Draw

Alt Text

Canada Can’t Get Its Pipeline Problem Under Control

Canada’s once-booming oil industry has…

Alt Text

Are Oil Markets At A Turning Point?

Oil prices rebounded on Tuesday…

The Jamestown Foundation

The Jamestown Foundation

Founded in 1984, The Jamestown Foundation is an independent, non-partisan research institution dedicated to providing timely information concerning critical political and strategic developments in China,…

More Info

Trending Discussions

LNG Brings Russia And China Closer

Since 2001, Russian-Chinese relations have been largely grounded in security issues, both military and economic. The former is a shared perception of an increasingly aggressive United States and, in the case of Russia, concerns over the North Atlantic Treaty Organization’s (NATO) deployments on the periphery of both countries. In the economic sphere, the defining element is China’s rising interest in Russian energy exports. These twin issues will dominate Russian-Chinese relations for the foreseeable future and—given the geographical distances involved—focus increasingly on Russia’s Far East and the opening up of the Russian Arctic. Russia’s commitment to building up its Arctic infrastructure, as well as China’s interest in this pursuit, was illustrated by the arrival, on March 30, of Sovcomflot’s $300 million Kristof de Marzheri liquefied natural gas (LNG) tanker at the Kara Sea port of Sabetta, on the Yamal Peninsula (Komsomolskaya Pravda, April 2; see EDM, March 29).

China is heavily invested in the development of Novatek’s $27 billion Yamal LNG plant at Sabetta. Last year, Yamal LNG signed agreements, in Beijing, with the Export-Import Bank of China and the Development Bank of China for providing about $11.2 billion for a period of 15 years to build the LNG plant. This liquefied natural gas facility’s output will be exported from Sabetta, a port custom-built for that purpose (RBK, April 29 2016).

The deepening relationship between the world’s largest country and the world’s second-largest economy dates back to July 16, 2001, when Russia and China signed the Treaty for Good Neighborliness, Friendship and Cooperation, the first such agreement between these two neighboring states since 1950. The most important elements of the 2001 Russia-China treaty covered cooperation on border demarcation, coordinated efforts to resist a perceived U.S. drive toward global hegemony, arms sales, technology transfers, energy and raw materials sales, as well as joint efforts to combat the rise of militant Islam in Central Asia (Rossiyskaya Gazeta, March 20, 2009). Related: Georgia Is Giving Up On Gazprom

In the 15 years since the agreement was signed, significant progress has been made in all areas. During the period 2004–2012, foreign direct investment (FDI) by Chinese companies in Russia increased by a striking 40 times, to reach $4.9 billion (Xinhua, October 22, 2012). And in 2016, bilateral trade between China and Russia reached $69.5 billion, an amount that authorities hope to increase to $200 billion by 2020 (Russian.china.org.cn, February 20, 2017).

An integral element in increasing bilateral trade will be the increased maritime transit of goods and hydrocarbon resources by developing Russia’s merchant marine infrastructure. Sovcomflot intends to buy 15 LNG tankers in total to export Yamal natural gas. Given the importance of Asian markets to these energy exports, upgrading Russia’s Far East maritime infrastructure has become a high priority for President Vladimir Putin’s government. And today, the Yamal LNG development epitomizes a new development opportunity benefiting both countries (see EDM, March 29).

In March 2016, Russia began the total reconstruction of the Zvezda shipyard in Bolshoi Kamen Bay, Primorsky Krai, originally built in the 1950s. It will be the largest civil shipyard in Russia as well as a base for offshore equipment manufacturing and development. The shipyard will produce ships up to 350,000 tons, offshore platform infrastructure, reinforced ice-class vessels and other types of marine equipment. When Zvezda is fully operational, it will reportedly employ 6,500 workers (Dcss.ru, accessed April 7).

The Zvezda facility will complement the Far Eastern Shipbuilding and Ship Repair Center (FESRC), currently the Far Eastern Federal District’s main facility for constructing and overhauling seagoing vessels (Dcss.ru, accessed April 7). As with Yamal, Russia is interested in possible Chinese participation. Last August, Russian ambassador to China Andrei Denisov said, “We are proposing to our Chinese colleagues to contribute to the development of our shipbuilding in Russia’s Far East. We are interested in attracting Chinese partners. If the Chinese side expresses interest in the reconstruction and modernization of production at the Russian Zvezda shipyard, then we will consider options, whether it would be investments or the purchase of a stake” (Sputnik News, August 8, 2016).

Clouding this rosy picture, however, is the fact that while the Far East is already Russia’s least densely populated region, Russians have continued to leave the area in search of more opportunities in other parts of the country. A 2012 poll by the All-Russian Center of Public Opinion found that almost 40 percent of the inhabitants of the Far East and Siberia were considering the possibility of leaving, citing low salaries (44 percent of respondents) and lack of career prospects (36 percent). Of those who wanted to migrate, 57 percent want to move to another Russian city (Vostok-Media, July 13, 2012). Related: Uzbekistan, Gazprom Settle On 5 Year, $2.5B Gas Deal

Russian President Vladimir Putin has identified stopping the regional population outflow from the Far East to be a “key” task for the country. On September 1, 2016, he met with Vladivostok high school students on the eve of the 2nd Eastern Economic Forum and told them that his administration intended to retain and attract people to the region through an effective system of training young specialists (Kremlin.ru, September 1, 2016). Later that day, he visited the Zvezda construction site, thus highlighting the project’s political importance to the Kremlin.

Chinese interest in security for its energy imports will become an increasingly important factor in its relations with Russia. Moscow, in turn, will likely use that Chinese interest to bolster its Arctic development as well as its infrastructure investments in the Far East, particularly its maritime infrastructure. But whether Putin’s administration can convince Eastern Siberia’s population to participate in the region’s renewal remains to be seen.

By The Jamestown Foundation

More Top Reads From Oilprice.com:




Download The Free Oilprice App Today

Back to homepage

Trending Discussions


Leave a comment

Leave a comment





Oilprice - The No. 1 Source for Oil & Energy News