China: Russia Becomes Top Fossil Fuels Supplier

(30 September 2020) With global economic activity constrained by COVID-19, energy demand globally has likewise headed south, sending suppliers of fossil fuels hunting for new buyers and reinforcing contracts and infrastructure ties with existing. The Chinese market is particularly attractive, and Russia has recently achieved competitive gains in this valuable market. China not only represents the largest market today for fossil fuels but its economy has already begun to recover ahead of global economic peers, reigniting energy consumption. Along with India, China is also expected to be among the only major economies driving global demand in the long-term.

• During March to August 2020, China's fossil fuels imports from Russia accounted for 18 percent of China's total fossil fuels imports by value, a statistic unchanged from 2019. In contrast, Saudi Arabia's share in China's imports of fossil fuels decreased to 14 percent for the March to August 2020 period from 18 percent in 2019.
• Russia's gains were enabled by long-term investments in expanding its export infrastructure. In late 2019, Russia launched the natural gas pipeline known as "Power of Siberia", or the China–Russia East-Route Natural Gas pipeline. China contractually obligated to purchase 5 bcm of Russian natural gas in 2020 and scale up to 38 bcm in the next five years. Simultaneously, Russia's Eastern Siberia-Pacific Ocean crude oil pipeline reached maximum operating capacity, delivering 130 million tones of crude oil to Russia's port at Kozmino on the coast of the Sea of Japan, which is then transported by sea mostly to China and South Korea.