The ally on the horizon: In Rosneft the Chinese company can replace BP? | Latest news The Moscow Post
25 May 2022

The ally on the horizon: In Rosneft the Chinese company can replace BP?

After introduction concerning Russia of sanctions, China became even closer to Russia.

Democracies tour

The Embassy of China in Moscow called the USA the true threat to peace. The diplomatic mission showed and commented on the picture of information department of the Ministry of Foreign Affairs of China with the signature "The list of bombings of the USA: world tour of democracy". The list of the American foreign interventions, from the Korean war to the conflict in Syria is provided in her, the correspondent of The Moscow Post tells.

Earlier, the permanent representative of China at the UN Zhang Jun who abstained when voting under the resolution of the Security Council condemning the special military operation in Ukraine performed for the purpose of protection of residents of Donbass, a denazification and demilitarization of the country called reasonable concern of Russia in the sphere of safety. According to him, China supports the general, comprehensive safety. "We believe that safety of one country can't be ensured due to undermining safety of other countries".

On Friday, February 25 the President of Russia Vladimir Putin and the Chinese President Xi Jinping talked over by phone. The Chinese leader urged to create the effective and steady mechanism of the European safety. The Kremlin added that the conversation showed coincidence of basic approaches of the countries to questions of the international agenda.

China doesn't approve use of sanctions as a way of resolving the situation around Ukraine, considers that it will cause damage to economy, will interfere with process of political settlement. It was said by the head of the Chinese diplomatic service Wang And in phone call with Annalena Berbok, the Minister of Foreign Affairs of Germany.

Jurisdictions with "long hands"

According to the Chinese data, since 2011 the USA imposed more than 100 sanctions against Russia.

"Whether sanctions of the USA solved any problem? Whether the world became better because of these sanctions? Whether the Ukrainian question by itself thanks to sanctions of the USA against Russia will be resolved? Whether the European safety will be better guaranteed thanks to sanctions of the USA against Russia?", - the representative of the Ministry of Foreign Affairs of China Hua Chunying asked.

The anti-Russian sanctions initiated in response to special operation of Russian Armed Forces in Ukraine on a denazification and demilitarization of the country and also protection of Russia against threats from NATO are discussed in the West for a number of reasons. There are afraid of further rapprochement of Moscow and Beijing.

In 2021 the volume of bilateral trade of the Russian Federation and the People's Republic of China exceeded 140 billion dollars. The new project of the gas pipeline with a power of 10 billion cubic meters a year was recently announced in Beijing by the Gazprom and CNPC companies. The bargain on delivery of 38 billion cubic meters of gas within 30 years was concluded in 2014. The Force of Siberia gas pipeline began to work in December, 2019, the second - "The Union the East" as continuation of the Force of Siberia — 2 gas pipeline will pass through Mongolia, will increase deliveries to 50 billion cubic meters a year. Supply of pipeline gas from Russia to China in 2021 increased by 2.5 times to 14 billion cubic meters. China also buys liquefied gas of the project of Yamal LNG, is an investor of this project, plans to invest in the Arktik of LNG project. According to customs of the People's Republic of China, in import of LNG in 2021 Russia took the sixth place (4.53 million tons).

Rosneft delivering 7% of all consumed oil to the People's Republic of China signed during the recent visit of the president Putin to Beijing one more agreement with CNPC on delivery of 100 million tons of oil within 10 years through Kazakhstan. Export of the Russian oil to China in 2021 made 79.6 million tons, at cost grew by 45.5% of 40.3 billion dollars. On supply of oil to China Russia ranks second after Saudi Arabia. China can apply for a share of BP in the Rosneft company in the long term. BP leaves the list of its shareholders under pressure of the government of Great Britain.

In the conditions of sanctions, the Chinese credits through China Development Bank and Export-Import Bank of China can soften financial blockade of Russia. Several Russian banks joined the Chinese system of exchange of financial messages of Cross-border interbank payment service provider which can facilitate non-dollar calculations. Such payment service providers of China as Alipay, are used in the Russian Federation. A part of agreements on deliveries of energy carriers can be also paid in yuans.

The Chinese experts say that the USA can broaden the sphere of financial sanctions against Russia on other countries. Washington can introduce restrictions for the third countries and their financial institutions if they conduct operations with the Russian banks. If the USA imposes sanctions or "jurisdictions with long hands" against China, it will cause bigger damage to recovery of world economy and the Chinese-American commercial relations, - the Chinese Foreign Ministry states in this regard.

Power as board

From hydrocarbons to hydrogen! Someone remembers this idea of the EU which was discussed at the summit in Glasgow in November of last year? Care of climatic stability quickly was replaced by care of weakening of Russia - the main source of hydrocarbons for needs of Europe. It is necessary to remember that for the EU the strategy of "green transition" in the sources was connected with desire to weaken power dependence on the Russian Federation, to put pressure upon Moscow.

The way this not close will also be very expensive. In 2020 the export of the Russian gas to Germany made nearly 46 billion cubic meters, Italy (20.8 billion cubic meters) ranked second, on the third there was Austria (13.2 billion cubic meters). Deliveries to eight more "old" EU countries made 22 billion cubic meters, Turkey imported 16 billion cubic meters of gas. The market of east Central Europe is also considerable. In 2020 Russia sent 39 billion cubic meters of gas to Hungary, Poland, the Czech Republic and Slovakia.

65% of the Russian export of oil from the Black Sea ports and more than 90% of volumes of export of oil from the Baltic ports are the share of the European buyers (minus Turkey). In this area the interdependence of Europe and Russia in the medium term will be hard to be overcome. Every day on network of pipelines and via export terminals on the Baltic and Black Sea about 2.3 million barrels of the Russian oil come to Europe.

In 2021 28% of import of Germany gasoil were the share of Russia, his share in the market of Germany made 9%. On this product of the Russian Federation covers 63% of import of Poland and satisfies 15% of her demand. In 2020 27 EU countries imported 21% of fuel oil from the Russian Federation. Lithuania, Estonia and Latvia and also Germany, Finland and the Netherlands are among main importers. Russia also delivers naphtha to Finland, Sweden, Belgium, France and Italy.

The pipeline Friendship system in whole or in part provides with raw materials six oil refineries of Europe. This oil pipeline more than others supplies with raw materials Germany and Poland. Transneft in 2021 delivered on this oil pipeline at oil refinery in Europe 35.9 million tons of oil. Poland, Hungary and Bulgaria import more than 80% of oil from Russia, others receive more than a half of volumes of raw materials necessary for them from the Russian Federation. Oil is also delivered to Europe by the sea from three ports in the west of the Russian Federation.

Partially these communications can be considered conditionally the heritage left the Soviet era. With disintegration of the Soviet Union the former East European allies of Moscow didn't refuse these favorable communications. But in new conditions, having joined NATO, these countries wish to act as provokers. Even don't think of the fact that pressure of Brussels and Washington upon Russia can lead to the fact that export of energy resources can be used for protection of the Russian national interests.

Import substitution and new markets

As of evening on February 27, practically all EU countries and London closed the sky for flights of the Russian airlines. Russia will face also other problems in air traffic. Brussels made the decision on a total ban of deliveries and leasing of planes, helicopters and other aviation equipment, their insurance and servicing. The park of the Russian airlines can be reduced more, than twice.

In new conditions the special attention has to be concentrated on production of the MS-21, SSJ-100 aircraft and others. SSJ-New in the version with the French SaM-146 engine has to be certified by 2023. By 2024 the Russian PD-8 engine can be ready. Russia then will be able to rely on the planes, first of all, of MS-21 on the basis of which airliners with the range of 9-10 thousand km can be made.

All points that in the closest years of the relation of Russia with Europe they will test serious tension and restrictions. Economic relations with Germany can fall the main victim. The government of Germany can freeze assets of Russians for the sum of 25 billion euros. Assets include shares in firms, securities and bank deposits. The edition reported that only in 2019 the private investments of the Russian companies and business owners into Germany made 8.9 billion euros.

Replacement of hi-tech products will demand search of new sources of import, development of own analogs. It is planned to replace nearly 1 thousand positions in 23 industries, including mechanical engineering, radio electronics, pharmaceutics, metallurgy. The head of the government Mikhail Mishustin charged to analyze "in the shortest possible time" a complex of possible decisions, especially concerning the systemically important enterprises.

German producers are gradually losing the Russian market. Germany's share in Russia's imports in 2021 amounted to 9.3%, in 2013 it was at a level slightly above 12%.

In 2013, bilateral trade amounted to almost $75 billion, in 2021 volumes fell to $57 billion. Exports to Russia in 2013 amounted to $38 billion, in 2021 fell to $27.3 billion. Germany's share in Russia's foreign trade turnover fell from 8.9% in 2013 to 7.2% in 2021.

At the same time, deliveries through the Nord Stream gas pipeline in 2021 remained at the level of record 2020 - 59.2 billion cubic meters, the share of Russian gas in gas imports by Germany increased from 40% in 2012 to 55% in 2021.

Yuan in exchange for the euro?

The Ministry of Economy reported that the share of OECD countries, including the USA, EU, Canada, Japan and Australia, in the structure of Russian exports in 2021 was slightly more than half. The energy sector has been removed from sanctions, but the task is to develop new markets. The system of export support outside of raw materials and energy will have to be changed. The main role in this belongs to the ВЭБ.РФ and the Russian Export Center, which fell under sanctions. It is necessary to promote Russian goods to the markets of Latin America, Asia, Africa and the Middle East.

The priority for Russia remains the stability of the national economy and the preservation of positions in the world economy, taking into account sanctions. Prime Minister Mikhail Mishustin held a meeting on the new economic situation and measures to adapt to the new conditions. The response involves the use of Central Bank reserves (as of February 18, 643 billion dollars) and savings of the National Wealth Fund (the liquid part at the beginning of the month is 8.8 trillion rubles).

These tools should help stabilize the ruble exchange rate, provide external borrowing, the volumes of which can grow. The Ministry of Finance assures that fluctuations in exchange rates and exchange quotes are short-term. For a period of increased volatility, a "comfortable regime" is created for banks. Liquidity requirements will be relaxed.

From the Security Council of Russia, words were made about the structure of Russia's foreign exchange reserves, in which it is necessary to redistribute. The ban on the circulation of the euro, according to Dmitry Medvedev, can be compensated for by operations in the yuan. "This is a new, very promising, taking into account the volume of the economy of the People's Republic of China, reserve currency. I don't know who's gonna lose any more. A system that issues a dollar or euro? They are also well aware that in this case we will simply support the Chinese economy to a greater extent and lower their economies. Who benefits from this is a matter of taste, "said Dmitry Medvedev.

The right to national interests

In recent years, when the United States played the "Ukrainian card," it was not only about the national interests of Russia. The United States is also not inclined to recognize the right of the PRC to its national interests. The international political fuss around Taiwan, the supply of American weapons to the island, provocations in the South China Sea, despite Beijing's protests, resemble Ukraine.

In the context of the consistent expansion of NATO to the east, Russia's legitimate security demands should be taken seriously, said the head of the Chinese diplomatic mission, Wang I. He noted that China advocates a common, comprehensive and sustainable security concept. According to Wang Yi, the security of one country cannot be achieved by compromising the security of other countries, and regional security cannot be guaranteed by strengthening or expanding military blocs. Add - or creating military blocks, like, for example, AUKUS.

Moscow and Beijing face the need to advance the agenda of ensuring their national interests in the context of Eurasia's security. This may include dialogue for the Western Pacific, increased attention to the actions of US military alliances in this part of the world. The Indo-Pacific process of the NATO alliance includes AUKUS, as well as Japan and South Korea in the Far East. The security of the DPRK, bordering the Russian Federation and China, is also on the Pentagon's list of potential targets.

Photo: RIA Novosti/Sergey Guneev, https://www.dw.com/

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