As the EU tries to wean itself off dependence on Russian gas, it could become more dependent on Chinese supplies, some of which come from Russia. This could undermine the goal of reducing its fossil fuel purchases.
Russia may not be supplying much gas directly to the West right now, but it can still find its way to the EU
As China and Russia meet to discuss broader issues, reports suggest that Russian gas exports are finding their way to Europe – via China.
"The global liquefied natural gas (LNG) market is increasingly integrated, and regional demand shifts can help balance otherwise strained markets. This rerouting of flows serves the interests of all stakeholders," Nicholas Kumleben, director of energy research at the macroeconomic consultancy. a Greenmantle firm, he told DW.
Ahead of winter, Europe's gas storage tanks are now nearly 80% full, thanks in part to LNG exports from China, The Nikkei reports. Russia has drastically cut gas supplies to Europe since its invasion of Ukraine.
China accelerates gas exports
Chinese LNG companies have increased supplies to overseas markets in response to rising demand.
This year, Chinese companies sold 4 million tons of LNG on international markets. This represents about 7% of European gas consumption in the first half of the year. Evidence of this came from China's JOVO Group, an LNG broker, which said it had sold LNG cargoes worth up to $100m (€103m) to a European buyer.
China's biggest oil refiner, Sinopec Group, also said it had diverted excess LNG to the international market. Local media reported that Sinopec sold 45 cargoes of LNG, or about 3.15 million tons.
"If Europe is buying LNG from China, then yes, potentially some of it could be Russian, if it's specifically mixed," Anna Mikulska of the Baker Institute for Public Policy's Center for Energy Studies at Rice University told DW. "I don't believe there are any rules of origin for content - ultimately it's still a matter of moving volumes."
This appears to be a circumvention of sanctions against Russia, although the EU has not imposed sanctions on Russian gas. Russia is systematically cutting supplies and the LNG markets are interconnected.
"The EU can do nothing but not buy from China, but then expose itself to potentially serious gas shortages in the winter," Mikulska added. "In this way, it is China and not Russia that gets the potential additional profits from the resale of this gas."
The construction of the Power of Siberia gas pipeline is financed jointly by Russia and China
China buys Russian gas
Sales of Russian pipeline gas to China increased by nearly 65% in the first six months of the year compared to 2021. Since Russia's invasion of Ukraine, China's spending on energy imports from Russia has risen to $35 billion from $20 billion a year earlier. , Bloomberg reported.
Russia's Gazprom and China National Petroleum Corporation (CNPC) signed a 30-year, $400 billion contract in 2014 to build the Power of Siberia pipeline, a 3,000-kilometer (1,865-mile) stretch in Russia and 5,000 kilometers in China. The pipeline was commissioned at the end of 2019 and is expected to supply up to 38 billion cubic meters of gas per year to China after reaching full capacity in 2025.
Moscow's energy plans call for increased exports to China. Russia knows it needs to diversify into new markets as the EU reduces dependence on its supplies.
"What Russia sells to China is also based on contract prices, and in my opinion, the agreement between China and Russia for Power of Siberia 1 was more favorable for China, even in terms of price," Mikulská reasoned.
"The Chinese would break Gazprom's export monopoly by continuing to sell Russian LNG," said Albrecht Rothacher, an EU diplomat and East Asia specialist. "The Kremlin would have to be really desperate - or politically very weakened - to allow this," he told DW.
Russia appears keen to expand its economic cooperation with China as Europe turns away from the Kremlin
Russia appears keen to expand its economic cooperation with China as Europe turns away from the Kremlin
Not enough - and too much
Experts warn that Europe cannot expect Chinese suppliers to cover its energy shortfall, given that the total amount of gas China can export to Europe is limited compared to other sources such as Russia.
As economic activity in China picks up, the situation will also reverse, leaving Europe dependent on Beijing for its gas at higher prices.
"I'm afraid that China is not really on the EU's radar yet for potential LNG supplies," Rothacher said.
“There may be some surplus shipments from Yamal heading west to Europe, but they would be negligible compared to what the EU needs to import from Norway, Algeria, Qatar, UAR, Turkmenistan, Azerbaijan, Oman, Israel, possibly Iran and last but not least No. at least the U.S. to make up for Russia's shortcomings, which remain unpredictable at this point."
Sino-Russian cooperation
Mikulsksa believes that the situation reveals an issue that the EU, as well as the US and NATO, will have to really think about, namely "that when Russia and China tend to cooperate, they can work together to manipulate/influence global energy markets". to a level that is much greater than if they acted independently," Mikulska pointed out.
"This will not be solved until Europe solves the alternative supply issues, it will not be easy and it will not happen this winter," she said.
Mikulska adds that it will not be so easy for Russia either
"Additionally, there is the possibility that Russia is becoming increasingly dependent on China for energy demand. And while the two countries are now working together, it's a complicated relationship to say the least."
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