Russia Likely to Remain China’s Top Oil Supplier

BEIJING (Sputnik) – The on-going deepening of Russian-Chinese energy cooperation and the diversification of financial mechanisms in crude oil trade is likely to help Russia remain China's main oil supplier, the director of the Center for International Energy and Environment Strategy Studies of China's Renmin University told Sputnik on Wednesday.

Earlier in June, Bloomberg reported — citing Beijing-based General Administration of Customs (GAC) — that Russia had outpaced Saudi Arabia in May to become the main supplier of oil to China. According to GAC, China's imports from Russia that month were up 20 percent on April, reaching a record of 3.9 million tonnes, while Saudi supplies dropped by 42 percent to 3 million tonnes.

"Russian-Chinese cooperation in the sphere of energy and especially in the sphere of hydrocarbons has great importance for the people of the two countries and if the implementation of all the contracts and agreements signed in this sphere begins as soon as possible, than there is every reason to believe that Russia will win the laurels [of being China’s largest oil supplier,]" Xu Qinhua said.

The Chinese expert noted that China is the world’s second largest oil consumer and that Russia and China are connected by oil and gas pipelines. In addition, Russia also supplies oil to China via rail.

"From the Russian side we have joint development of fields, from the Chinese – cooperation on LNG [liquefied natural gas]. In addition, China is connected to the largest markets of Eastern Asia (Japan, Korea). It would be an inexcusable omission if Russia and China did not cooperate," Xu said.

He added that the current tendency to diversify financial instruments, such as oil-for-loans or payments in the Chinese currency, the yuan, also help the cause of Russia being China’s largest oil supplier.

In 2014, as Moscow’s relations with the West went downhill amid the Ukrainian crisis, Russia and China boosted bilateral cooperation in several spheres, including energy.

In 2013, Russia’s state-owned oil company Rosneft and the China National Petroleum Corporation (CNPC) signed a $270-billion deal for the delivery of 365 million tonnes of oil to China over 25 years.

On Saturday, Rosneft and China National Chemical Corporation (ChemChina) signed a contract at the St. Petersburg International Economic Forum for the delivery of 200,000 tonnes of crude oil per month to the Chinese company.