The Altay Pipeline: A Geopolitical Game Changer

Source: BP Statistical Review of World Energy 2018.

 

It is a matter of common knowledge that energy relations between Russia and China have boomed in the past decade, with all sorts of new infrastructure being built to facilitate the ever-further expansion of bilateral energy trade. Yet it has seemed for some time now that new gas projects are very unlikely to happen – the 38 BCm per year Power of Siberia pipeline will go onstream December 20, 2019 and seemed to satiate China‘s needs for Russian gas – but that has now changed. A second project, generally denoted as the Altay pipeline (sometimes also mentioned as Power of Siberia-2), which had been stalled for four years due to limited demand and Gazprom’s sanctions-induced constraints, is set to be the next big Russo-Chinese gas project. Continue reading

China and India Establish “Oil Buyers’ Club” to Counter OPEC

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On June 11, major Chinese and Indian oil companies started a formal meeting in Beijing, discussing the establishment of an “oil buyers’ club” to negotiate better prices with OPEC countries. The chairman of China’s biggest energy company China National Petroleum Corporation (CNPC), Wang Yilin, and the chairman of refiner Indian Oil Corporation both attended the meeting. According to the India Times, the two largest energy consumers together accounted for almost 17% of world oil consumption last year. Should this “oil buyers’ club” become a reality, New Delhi, and Beijing will have greater leverage to negotiate with OPEC about oil prices and will also have a significant say in matters such as importing more crude oil from the US. Continue reading

OPEC Has Regained Its Grip On Oil Markets

OPEC

 

Higher oil prices seem to have given OPEC the confidence that it needs to begin thinking about moving forward, and with Russia in the mix as well, it appears as though the alliance will be a force to be reckoned with.

– Gasoline prices averaged $2.92 per gallon for the week ending on May 21, and have surpassed $3 per gallon in regional markets.

– The prices are the highest for the Memorial Day weekend in four years.

– However, prices are likely to fall back soon with crude oil prices plunging over the past week. Continue reading

China intends to oust dollar from oil trade

China is planning to launch its own oil benchmark in October, similar to Brent and WTI, striving for a more important role in establishing crude prices. Unlike the Western benchmarks, the Chinese contracts will be nominated in the yuan, not the US dollar.

Shanghai International Energy Exchange sent a draft futures contract to market players in August, Reuters reported quoting sources. Continue reading

China reaps harvest from Russia sanctions

China is gaining an edge in energy deals with Russia as Moscow faces sanctions pressure from the conflict in Ukraine.

The latest energy accords announced in Beijing on the sidelines of the Asia Pacific Economic Cooperation (APEC) summit suggest that China is increasing its access to Russian resources while resisting demands for more favorable financial terms.

At a signing ceremony on November 9, Presidents Xi Jinping and Vladimir Putin sealed a memorandum of understanding for a second Siberian gas pipeline on a western route that Russia has promoted unsuccessfully for years.

The preliminary commitment to the project known as the Altai pipeline, named for a remote Russian border region, follows an agreement in May on an eastern Siberian gas line to supply China’s coastal cities and industrial northeast. Continue reading

Russia and China strengthen oil and gas deals

Chinese and Russian oil companies signed several deals during the recent Asia Pacific Economic Cooperation annual meeting in Beijing, indicating that the two countries have entered a honeymoon period in the area of energy cooperation, Guangzhou’s 21st Century Business Herald reports.

China National Petroleum Corp (CNPC) signed framework deals with Russian oil company Rosneft and gas supplier Gazprom Nov. 9 for buying a stake in an oilfield in Russia and in gas supplies.

The deals came as Moscow saw a further drop in oil prices and in its currency, the rouble, since July, which has hurt the Russian economy, the newspaper noted. Continue reading

Russia, China to sign government agreement on gas supplies via eastern route

Russia’s gas producer Gazprom and China National Petroleum Corporation agreed in May that Russia will supply China with 38 billion cubic meters of gas starting from 2018-2019

The intergovernmental agreement to seal the deal to supply Russian natural gas to China via an eastern route will be signed during a meeting of the two countries’ prime ministers, Dmitry Medvedev and Li Keqiang, in Moscow, the source said. Continue reading

Conflict over Natural Resources

BERLIN/LIMA (Own report) – The Catholic relief organization Misereor is sharply criticizing the new “Raw Materials Partnership” accord, concluded between the Federal Republic of Germany and Peru. Misereor writes that it fears “an aggravation” of the already growing “social conflicts developing around mining projects” in this South American country. This recently signed raw materials treaty grants German companies privileged access to Peru’s resources. The German government has now “signaled the Peruvian government” that “the expansion of the raw materials sector takes priority” over social and ecological regulations affecting that sector. The “raw materials partnership” is one of the measures Berlin is implementing within the framework of its “raw materials strategy” adopted in 2010, to be able to stand its ground in the global competition for access to the most important natural resources – particularly in relationship to China. Peru is an important source of metallic raw materials for Germany. The guarantee of raw materials is more important to Berlin than Misereor’s misgivings. Continue reading

Russia’s Gazprom Ready to Use Yuan, Rubles in Accounting with China, Sees No Risk

MOSCOW, June 26 (RIA Novosti) – Russia’s energy giant Gazprom says it sees no risk in using the Chinese yuan or the Russian ruble in accounting practices with Chinese companies, the company’s head of finance and economics, Andrei Kruglov, said Thursday.

“In regard to using the yuan or rubles in accounting, we are basically ready for that, we think that this is completely normal. There are no risks for Gazprom, except for minor transaction expenses,” Andrei Kruglov said. Continue reading

Brazil finds bumpy path on way to becoming world oil power

Brazil’s efforts to become one of the world’s major oil producers have attracted businesses such as U.S. drilling giants Halliburton and Baker Hughes, gained it partnerships with oil companies from India and China, lured immigrants from idyllic Norway and drawn investment dollars from American pension funds in Florida, South Carolina and California.

But the prospects for success have darkened in the seven years since Brazil first identified massive oil deposits in deep water off its coast. Many fear that Brazil’s chance to become one of the world’s major energy producers is fading as the global energy landscape changes dramatically. Continue reading

China pivot fuels Eurasian century

A specter is haunting Washington, an unnerving vision of a Sino-Russian alliance wedded to an expansive symbiosis of trade and commerce across much of the Eurasian land mass – at the expense of the United States.

And no wonder Washington is anxious. That alliance is already a done deal in a variety of ways: through the BRICS group of emerging powers (Brazil, Russia, India, China, and South Africa); at the Shanghai Cooperation Organization, the Asian counterweight to the North Atlantic Treaty Organization; inside the Group of 20; and via the 120-member-nation Non-Aligned Movement (NAM).

Trade and commerce are just part of the future bargain. Synergies in the development of new military technologies beckon as well. After Russia’s Star Wars-style, ultra-sophisticated S-500 air defense anti-missile system comes online in 2018, Beijing is sure to want a version of it. Meanwhile, Russia is about to sell dozens of state-of-the-art Sukhoi Su-35 jet fighters to the Chinese as Beijing and Moscow move to seal an aviation-industrial partnership. Continue reading

Russia’s “Holy Grail” Gas Deal With China Now “Only One Digit Away”

We have previously profiled the “holy grail” gas deal between Russia and China on several occasions, and noted last week how it is expected to be signed this week – pending some final price negotiations. It appears that was spot on as Reuters reports, Russian state-run Gazprom said it was still “one digit” away from finalising a 30-year gas supply deal with Beijing which is expected to crown Russian President Vladimir Putin’s visit to China next week. On the heels of Russia’s de-dollarization meetings, the coming week appears a crucial one for the history books of the US Dollar as reserve currency (or will China leverage Russia’s need to diversify from Europe and stall the deal once again?) Continue reading

China took away the Turkmenistan – Afghanistan – Pakistan – India pipeline from USA

“With a subtle motion of the hand” China took away the Turkmenistan – Afghanistan – Pakistan – India (TAPI) pipeline project from USA and became yesterday the chief controller of gas resources in Central and South Asia.

Somebody else’s ideas and plans have been expropriated by means of contract for sale of 25 bn cu m of gas per year concluded between State Concern Turkmengas and Chinese Company CNPC.  The deal will increase the total volume of Turkmen gas supplied to China up to 65 bn cu m. At the same time the agreement is achieved on the planned new direction of Turkmenistan – China pipeline (D direction) for additional supplies. Continue reading

Is Sri Lanka Becoming A Key Player In China’s String Of Pearls?

China has offered Sri Lanka new loans for infrastructure projects, worth US$ 2.2 billion dollars. In a reply to a question, the Chinese Foreign Ministry spokesperson, Mr. Hong Lei told the news media that in addition to infrastructure loans, both countries agreed to further deepen defence cooperation and maintain exchanges between two defence ministries, whilst they continue to carry out in cooperating defence technology, personal training and other fields. Yet, the spokesperson did not reveal further details regarding the nature of the new strategic cooperation.

Sri Lankan External Affairs Minister Professor G. L. Peiris, mentioned in an interview with Global Times that, Sri Lanka will embrace China’s rise and characterised bilateral ties as “very warm and mutually supportive”. He also mentioned that China has “stood the test of time”, referring to the military support the country extended during the last phase of the war against the LTTE, as well as the support given to Sri Lanka against a US-backed resolution at the UN Human Rights Council in Geneva. Continue reading

China’s Strategy in Afghanistan

Beijing is keen to increase its involvement in the country following the planned U.S. withdrawal in 2014. But security problems may interfere.

For a relatively small drilling operation, China National Petroleum Corporation’s (CNPC) project in Afghanistan’s Sar-e-Pul province has a large footprint. Several layers of fences and containers serving as blast walls surround the extraction site, which includes dormitories, an office complex and various security structures. Throughout the day, trucks ferry in equipment and more containers. On the outside, the faces are all Afghan, but CNPC’s logo and bright red Chinese slogans are impossible to miss. Continue reading