Experts Say Sino-Russian Energy Cooperation Has Long-term Strategic Significance

On the 11th, Wang Qishan, the Chinese representative of the China-Russia Energy Negotiations and Vice Premier of the State Council, co-chaired the Sino-Russian energy negotiators' representative meeting with Russian representatives of the Sino-Russian energy negotiations and Russian Deputy Prime Minister Sechin. Xie Qin told the media that the governments of China and Russia have made "important" progress in negotiating natural gas prices for Russian exports to China.

Liu Yijun, a professor at the China University of Petroleum (Beijing) School of Business Administration, said in an interview with reporters that although China and Russia have differences in the pricing of natural gas, the two sides can talk about it slowly. However, the long-term benefits of the cooperation between the two countries are very clear: Europe is firm. In implementing the diversification of natural gas sources and Sino-Russian natural gas project negotiations, during the “Twelfth Five-Year Plan” period, China’s import of natural gas from Russia was not urgent, and there was a period of contemplation.

“Basically, the situation in which Russia’s incremental gas can truly profit in emerging markets has not changed, and losing to China will also be able to balance future trade and exert its influence on China.” Liu Yijun said, looking at the entire energy market, Everyone is ridding itself of Russia’s dependence. Russia needs the big energy demand in China. At present, the unstable situation in the Middle East and North Africa has greatly reduced the safety factor of China's overseas energy supply. The impact of potential political turmoil in Central Asia on the energy channel in Central Asia cannot be underestimated. Sino-Russian energy cooperation can well resolve this risk. .

Once Sino-Russian gas cooperation starts, China will receive Russia's long-term stable natural gas supply channels. From a long-term perspective, this has strategic significance for safeguarding China's energy security. However, we must also realize that the establishment of an energy cooperation relationship between the adjacent great powers requires more long-term mutual trust and cooperation. This is the case of the Sino-Russian oil cooperation project. Today's natural gas cooperation projects still need to be prepared for protracted warfare.

Lin Boqiang, director of the China Energy Economic Research Center at Xiamen University, said in an interview with reporters that Russia’s rich natural gas energy needs more buyers, and China, as Asia's largest energy consumer, has a huge market, so a win-win situation Both parties have expectations for reaching a further consensus.

Although foreign media claimed that in recent years China has cultivated other energy supply channels based mainly in Central Asia, inciting Russia’s monopoly position in the Asian energy market, Lin Boqiang believes that Russia is still the most important source of China’s natural gas imports. As early as October 2009, PetroChina and Gazprom had reached a framework agreement on the supply of natural gas. According to the agreement, after the opening of the East-West two natural gas pipelines, Russia will deliver nearly 70 billion cubic meters of natural gas to China each year.

Resource tax reform helps to resolve the gap between domestic gas and imported gas prices. The “Decision of the State Council on Amending” will be implemented on November 1 this year. The tax rate for crude oil and natural gas is 5%-10% of sales. Lin Boqiang predicts that after the implementation of the "Decision", the domestic natural gas prices may be pushed up, and then the gap between imported and natural gas prices will shrink. This may indirectly increase the price competitiveness of imported natural gas.

“Resource tax reform is a major institutional construction and an important part of the natural gas pricing mechanism reform. It has effectively resolved the contradiction between domestic gas and imported gas price gaps, gas production areas in the west, and gas intervals in the eastern and central regions, making natural gas the next step. The reform of the pricing mechanism received support from local governments in the western region,” said Liu Yijun. “Of course, it is still focusing on institutional construction and the matching is not perfect. The actual implementation of the tax rate will not be excessive.”