The 2024 Russia-China Energy Business Forum – Highlights

The sixth Russia-China Energy Business Forum (RCEBF) has been taking place in Moscow, with over 500 politicians, heads of major companies in the energy and related industries, scientists, experts and analysts attending.

Russia and China discussed issues of cooperation related to energy and the supply of hydrocarbons. The RCEBF has been held annually since 2018 in accordance with the agreements reached by Russian President Vladimir Putin and Chinese President Xi Jinping, and is being held under Development Strategy of the Fuel and Energy Complex and Environmental Safety of Russia, and the State Energy Administration of China. The event is co-organised by Russia’s largest oil company Rosneft and China National Petroleum Corporation (CNPC).

We discuss what took place at RCEBF, in an industry responsible for 40% of all Russia-China trade. Much discussion focussed on the transactional and settlements issues Russia and China both face. 

Putin’s Statement

Igor Sechin, the Head of Rosneft, made the opening remarks, in a message from Vladimir Putin, which stated that “Bilateral cooperation in the oil and gas, coal and electric power sectors is steadily expanding. Russian energy supplies to China are reaching record volumes. Specialists from our countries are working together to improve technologies for the extraction, processing and transportation of raw materials, and to increase their environmental safety.” According to Putin, the Russian-Chinese Energy Business Forum plays an important role in ensuring direct and constructive dialogue on issues of cooperation in these vital industries.

Xi Jinping’s Statement

Ding Xuexiang, the Chairman of the China National Petroleum Corporation (CNPC), introduced a message from Chinese President Xi Jinping, which read “The Chinese side is ready, together with its Russian colleagues, to further promote mutually beneficial energy cooperation, ensure stability and strength of production and supply chains in the energy sector, and contribute to a more dynamic, green and healthy development of the global energy industry.” According to Xi, the RCEBF has become an important platform for establishing contacts, strengthening mutual understanding and promoting cooperation between Russian and Chinese enterprises.

Russia-China Energy Trade Volumes

Sechin said that energy accounts for more than 70% of Russian exports to China. “For 75 years, there have been different periods in relations between our countries, but, as our leaders have repeatedly stressed, today they are at an unprecedentedly high level.” According to him, in 2023, the trade turnover between Russia and China increased by 26% and reached US$240 billion. According to the head of Rosneft, Russian-Chinese cooperation in the field of energy supplies is unparalleled in the Eurasian space. In 2023 alone, Russia exported 107 million tonnes of oil, 34 billion cubic metres of natural gas and more than 100 million tonnes of coal to China.

Sanctions & Subsidies

Sechin also noted that Western governments had underestimated the growth potential of the economies of Russia and China, and the imposed sanctions and unprecedented pressure on Russia and China had instead strengthened the economies, development and political cooperation of the two countries.

He said that “All efforts to curb the growth of our countries lead to the opposite result: the GDP growth rates of China (reached 5.2% in 2023) and Russia (3.6%). These are now confidently ahead of Western countries and global averages. At the same time, the West initially overestimated the effectiveness of its sanctions on the powerful potential of our economies. Last year, the IMF raised its forecast for Russia’s GDP growth four times. The year-end increase in Russia’s GDP exceeded initial expectations by almost 6 percentage points. A similar situation was observed in the case of China. Despite the inevitable slowdown of the Chinese economy repeatedly predicted by Western observers, again according to IMF forecasts, China’s contribution to global economic growth over the next five years will amount to 21%, which will exceed the combined contribution of all the G7 countries (20%).”

According to Sechin, the West is trying to slow down the economic development of the two countries. “The latest example of this is the sharp increase in protective duties by the United States and the European Union on goods, equipment and components in clean energy from China. (Ed: The EU has levied tariffs of 38% on Chinese electric vehicles and the US on the same by over 100%) 

Sechin concluded that “As the Chinese Foreign Ministry rightly noted, according to the logic of the United States, subsidies provided by the US Government are considered important industrial investments, while subsidies from other countries are considered unfair competition.” 

De-dollarisation

Sechin also said that “Changes in the global economy and politics are leading to a decrease in the role of the US dollar in world trade, which is illustrated by China’s recent success in using the RMB Yuan. Last September, the RMB Yuan overtook the euro for the first time in trading settlements via the SWIFT global financial settlement network. Also, for the first time, the RMB Yuan has overtaken the US dollar in China’s international settlements. The RMB Yuan’s share is now 53%.” 

“The dynamics of Russian-Chinese settlements is also indicative. Significant mutual commodity flow, as well as commodity flows from third countries, allowed us both to switch to settlements in national currencies, the share of which exceeded 90% by the end of 2023.” 

According to Sechin, in order to the use of national currencies both on a bilateral basis and in settlements with third countries, it is necessary to create appropriate infrastructure and tools for conducting clearing operations and opening correspondent accounts, as well as the entire range of systems for exchanging interbank messages. This is an issue RPA have recently discussed here following statements this week made by the Central Bank of Russia. 

Russia-China Cooperation

Ding Xuexiang, China’s Vice Premier, also stated that cooperation between Russia and China in the energy sector remains highly dynamic, despite the complex, volatile international situation and obvious processes of deep transformation of the global energy market. He noted the practical results achieved by the two countries. “The first is the steady growth of energy trade. The second is the progressive promotion of particularly significant projects. The third is the steady expansion in areas of cooperation. The parties are actively working to open new horizons of cooperation in the oil and gas fields.” 

According to Ding, it is necessary to continue to systematically promote trade and investment cooperation in the energy sector, unlock the potential of energy cooperation mechanisms, and consolidate bilateral cooperation dynamics in their energy trade. 

Strategic Direction

Alexander Novak, Russia’s Deputy Prime Minister, said that the Russian-Chinese Energy Business Forum has turned into a productive platform for dialogue and the development of practical cooperation between Russia and China, stating that “As always, everything is organised at the highest level.” 

“Russia also plays a stabilising role in overcoming the global energy crisis,” Novak said, stressing that the supply of fuel and energy resources from Russia increases the energy security and socio-economic stability of friendly countries, and long-term contracts of large Russian oil companies are the key to global reliability and providing China with energy resources from Russia at fair market prices.” 

Dai Houliang, the Chairman of the China National Petroleum Corporation (CNPC), acknowledged that turbulence is increasing in the international energy market and the structure of global trade is changing, meaning that Chinese-Russian energy cooperation is very important for the global energy model. He said that “CNPC, for its part, will continue to work with Russian partners, use this forum and other effective cooperation mechanisms to achieve more tangible results and reach new levels of energy security and cooperation on a global basis.” 

The Atlas Of Investments

Of note were additional comments from President Putin who said that among the important developments of the RCEBF, was the Atlas of Investments in Russian-Chinese Energy Cooperation. This is a unique information and analytical platform that diagnoses opportunities for the implementation of mutually beneficial joint projects and initiatives. This atlas allows investing businesses to get a deep understanding of the specifics of the work of the fuel and energy complex of Russia and China and has become a practical guide in the implementation of joint projects. It contains information on the current state and prospects of development of the fuel and energy complex of Russia, on management institutions and regulatory policy, examples of cooperation in the oil and gas industry, electric power industry, coal industry, nuclear energy, and renewable energy sources. It also contains information about the tools and opportunities for organising project financing and insurance in the energy industry in Russia. The data contained in the atlas is regularly updated by both parties. 

The VII Russian-Chinese Energy Business Forum will be held in 2025 and will be held in China.

Summary

Although much of the public commentary was somewhat bland, the take-aways are the high level of importance that both countries place on energy development. Both Presidents gave personal addresses, and in giving these to their highest level of Energy Officials to provide, equally illustrated that mutual developments are planned for and co-ordinated at the highest levels. This is a scientific, fully researched and politically supported area of Russia-China cooperation.

hile not explained in any detail, the two sides also commented on mutual developments in oil and gas, coal, nuclear, electric and the renewables energy sectors, meaning that bilateral energy cooperation is across a wide sphere. It should also be noted that regulatory policy is also being coordinated. What this means is that while projects are still being discussed and negotiated, the message is very clear: Russia and China intend to be long term energy partners for the foreseeable future, and that the impact of this – as seen in the references to the US dollar and Euro – are anticipated to have global implications.