Building Strong China-Russia Energy Strategic Partnership

China International Studies, September/October 2015, pp.67-80. | 作者: Shi Ze | 时间: 2015-12-02 | 责编: Wang Jiapei
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Shi Ze[1]

 

In recent years, China and Russia have witnessed lots of highlights in their energy cooperation, with breakthroughs and achievements made in some major programs. Deepening energy cooperation is not only a future-oriented strategic move for the two countries, but also an important and fundamental element of their relations, which is of great significance to their national interests. China and Russia should grasp opportunities, establish new thinking on their cooperation, properly handle their interests, innovate their cooperation model, earnestly push forward their all-round cooperation in the energy sector, and release the great economic potential of the strategic partnership between the two countries, making it a solid foundation for the in-depth combination of their bilateral relations and common interests. China-Russia energy cooperation will also exert an immeasurable and far-reaching impact on the global energy landscape and trends.

 

China-Russia Energy Cooperation: Charting a New Chapter

 

In the strong development momentum of China-Russia relations, energy cooperation is writing a new chapter for their bilateral relations with its eye-catching achievements. The promising energy cooperation has become an important symbol and strategic support that has propelled China-Russia relations to improve constantly. The energy cooperation between China and Russia demonstrates the following features:

 

1. Rapid improvement 

In April 1996, the two countries signed the Agreement on the Energy Cooperation between the People’s Republic of China and the Russian Federation. If that is viewed as the starting point, then it has been nearly 20 years since the two countries established energy cooperation ties. For a long time, under the influence of factors such as geopolitics and their domestic situations, negotiations between the two sides were not smooth, and no substantive achievements were made. At one point, the China-Russia oil pipeline project was suspended as the pipeline was to be rerouted; [2]PetroChina suffered setbacks twice when it was bidding for Russia’s Slavic Oil and in its cooperation with Yukos.[3] But since 2008, the process of bilateral energy cooperation has been significantly accelerated: In July 2008, the Sino-Russian Energy Negotiation Mechanism was launched in Beijing; in 2009, the two countries signed the framework agreement for a Memorandum of Understanding on Oil Cooperation; in September 2010, the China-Russia oil pipeline was completed on time, which means that the two sides have officially begun oil transportation operations through the pipeline. Meanwhile, natural gas cooperation between the two countries has also seen rays of hope. In May 2014, during President Vladimir Putin’s visit to China, the two sides signed natural gas agreements with the biggest size in the history of bilateral relations: the MOU of the China-Russia East Route Gas Cooperation Project and the China and Russia Purchase and Sales Contract on East Route Gas Project between PetroChina and Gazprom. In November 2014, the two countries signed their Memorandum of Understanding on the Russian Federation’s Gas Supply to the People’s Republic of China through the West Route Natural Gas Pipeline, and the Framework Agreement between China National Petroleum Corporation and Gazprom on Gas Supply from the Russian Federation to the People’s Republic of China through the West Route Natural Gas Pipeline.

 

2. Large size

China-Russia energy cooperation can be regarded as the world’s largest in terms of its size and the amount of capital involved. PetroChina and Rosneft Oil have signed a 25-year crude oil supply agreement. According to the agreement, China will provide $15 billion in loans to Rosneft Oil and $10 billion in loans to Transneft, respectively. On Russia’s part, it should supply China with 300 million tons of crude oil from 2011 through 2030, 15 million tons on a yearly basis, reaching as much as $270 billion. Reaching $85 billion, the 10-year oil supply agreement between Sinopec and Rosneft Oil provides that Rosneft Oil shall supply an additional 10 million tons of oil each year over the next 10 years, with an accumulative number of 100 million tons.[4] The agreement between PetroChina and Gazprom about the east route gas supply has reached $400 billion.[5] Both sides agreed that from 2018, Russia will start to supply gas for China through the east route, with the supply amount growing year-on-year, finally reaching 38 billion cubic meters a year, for a total of 30 years. The framework agreement on the west route gas supply signed by the two countries in November 2014 will reach as high as $400 billion. Just within a few years, the capital involved in the cooperation between China and Russia will reached nearly $1.2 trillion. This is unprecedented in the history of energy cooperation in the world.

 

3. Wide coverage

China-Russia energy cooperation covers different areas such as oil and gas, electric power, coal, nuclear energy and new energy. On their cooperation in oil and gas, the cooperation model has been upgraded from the simple sell-and-buy to production cooperation and mutual investment. The cooperation covers prospecting and exploitation, transport and refining, and sales and trade. Cases of successful cooperation in upstream sectors include Rosneft Oil and PetroChina’s sale of a 10 percent stake of the Vankor oil field project, PetroChina’s acquisition of a 20 percent stake in the Yamal natural gas project of Russia’s Novatek, and the joint development of the Srednebotuobinsk oil field by both countries.[6] And the Tianjin Oriental Refinery co-funded by China and Russia has become the first case in which Russia enters the downstream of China’s oil and gas industry. Benefitting from the use of a 5,000-kilovolt transmission line, the electricity trade volume between the two countries has greatly improved. In 2011, Russia’s exports of electricity to China amounted to 1.24 billion kilowatt-hours; by 2012, that had doubled to 2.63 billion; by 2014, the exports had reached 3.375 billion kilowatt-hours.[7] The trade volume of coal between the two countries has also increased significantly. In 2010, Russia exported 10.8 million tons of coal to China. Due to China’s goodwill for cooperation, as well as Chinese investment in Russia’s mining and supporting infrastructure, by 2012, that figure almost doubled, reaching 19.2 million tons.[8] Bilateral cooperation in the field of nuclear energy also witnessed in-depth development, with the second phase project of the Tianwan nuclear power plant already launched. On December 27, 2012, concrete was poured for the No.3 machine set of the Tianwan nuclear power plant. Meanwhile, cooperation on energy technology and equipment is also expanding.

 

 

4. Great potential

Thanks to the great complementarity between the economic structures of China and Russia, their energy cooperation enjoys large scale and broad space for development in both breadth and depth. Russia has the world’s most abundant resources storage, and its production of oil, natural gas, coal, electricity, and nuclear energy is among the highest in the world. According to the information released by Vagit Alekperov, a Russian authority on energy, “Among the 6.2 million square kilometers of continental shelf of the Russian Federation, about 4 million square kilometers have good prospects for oil and gas development; there are about 100 billion tons of recoverable reserves of hydrocarbon resources on the continental shelf of Russia, including over 13.5 billion tons of oil and about 730,000 cubic meters of natural gas.”[9] “Within the territories of Russia, as many as 3,200 oil and gas fields have been discovered, with only 1,600 developed and the other 1,600 untapped, even without licensing.”[10] Among the untapped fields, a considerable part of them are located in Western Siberia, Eastern Siberia and the Far East, which are close to China. As the world’s biggest market, China has witnessed rapid economic development and has a huge and constant demand for energy. In particular, China-Russia energy cooperation is carried out without the involvement of any third country, with obvious advantages such as convenience, safety, low cost, and large resource potential. Energy, as a strategic factor in the relationship between the two countries and an adhesive bond for their common interests, is seeing its strategic position and role in relations growing more prominent. At present, energy cooperation between the two countries has entered a new phase featuring long-term collaboration. With the innovation of mining technology and the following up of financial development mechanisms, the depth and breadth of cooperation will be further expanded. In terms of development trend, industrial experts have conservatively assessed that for oil alone, the scale of cooperation is expected to exceed 50 million tons in the future.[11] Gas cooperation will also start a new page. With the pavement for the eastern and western pipelines and the implementation of many gas projects, gas transported from Russia into China is expected to reach 100 billion cubic meters per year.[12] In addition, tremendous business opportunities have been unveiled in bilateral cooperation on oil and gas equipment and technology. And cooperation in the fields of electricity, coal, nuclear energy, and new energy will also take new steps. It can be said that Sino-Russian energy cooperation has covered almost all aspects related to energy. And the energy industry will inevitably have a huge spillover effect on their national economies, and is expected to become a strong driving force for the sustainable development of the two countries in the new era.

 

New Factors Driving China-Russia Energy Cooperation

 

At present, China-Russia energy cooperation enjoys a strong momentum. Compared with the past, some new factors to promote cooperation have emerged.

 

First, the profound changes in the global energy landscape have brought opportunities for bilateral energy cooperation.

Since the outbreak of the international financial crisis, the United States and developed economies in Europe have experienced economic downturns and shrinking energy demand. With emerging economies speeding up the process of industrialization, they have become undisputed new growth points of energy demand. The significant increase in energy production in North America has contributed to the trend in which supply exceeds demand worldwide. It is more and more obvious that energy production is moving westward while consumption has moved eastward. The center of gravity of the global economic development is increasingly moving to the Asia-Pacific region, and the market position of the Asia-Pacific has become more prominent. This is good news for China and Russia as they are both in the region. As the largest oil consumer and producer in the region respectively, China and Russia enjoy prominent advantages as they are close to each other geographically and complementary economically. Despite serious challenges, Russia is still irreplaceable as the leader of the non-OPEC producers. And China’s significance is also rising as an energy consumer. China has gradually weakened its energy ties with European and American countries, as well as traditional energy producers, while its energy cooperation with Russia and Central Asian countries continues to deepen. Energy cooperation on the Eurasian Continent is becoming closer, and has become an important field with growing influence in the global energy landscape. Strengthened all-round cooperation on energy between China and Russia will not only lead the socio-economic development of the Eurasian region, but also further promote the scale and process of energy cooperation in the Asia-Pacific, adding new impetus to the sustainable development of the regional economy.

 

Second, endogenous driving force promoting the development of bilateral relations is unprecedentedly prominent.

In the previous decade, China-Russian strategic cooperation was mainly in the international arena. In order to balance the power of other centers attempting to monopolize international affairs, the two countries could only cooperate for self-preservation. As a result, they only passively enhanced collaboration and interaction, which led to a great number of emergency measures and short-term effects, with their eyes on the realm of security cooperation. Meanwhile, China’s development has accelerated since its reform and opening-up, while Russia suffered a chronic economic downturn after the collapse of the Soviet Union. This situation has objectively restricted the expansion and quality of bilateral economic cooperation, and the different paces of economic development between the two countries are inevitable. In terms of foreign economic and trade policy, both countries looked to the West for their capital and technology, and the cooperation between them grew slowly despite the vigorous promotion at the governmental level. For a long time, although both countries could feel the constant improvement of bilateral relations, this fact did not promote each other’s economic and social development, which led to the absence of strong economic support for a China-Russia strategic partnership of coordination. Following the onset of the global financial crisis, the development strategies of both countries gradually moved onto the same track, as both countries were faced with the urgent need for economic development and restructuring, valued each other’s irreplaceable role in their own economic development, and regarded each other as the preferred partner to improve their own economy.

 

Third, new common interests have become prominent.

China’s rapid economic development has upgraded its role in foreign cooperation from a simple trading power to an investment power. Compared with the past, China already has a large amount of foreign exchange reserves and capacity for foreign investment. And cash-strapped Russia, which is now under Western pressure and sanctions, is eager to take advantage of China’s investment to expand energy infrastructure building and enhance its mining and processing capacity. Judging from the newly emerged common interests, the significance of bilateral strategic cooperation on energy is the long-term nature of cooperation is particularly important for the long-term development of each country. One can imagine that for a long period of time in the future, it will still be hard for Russia to change its industrial structure, which is strategically supported by energy. Energy will remain the key to the survival and development of Russia. Should Russia’s energy industry fail to realize phased strategy substitution and transformation, the country will face dim prospects for its development and prosperity. Currently, the key reason why the West suppresses Russia is they it aims to cut off development capital for prospective oil and gas fields which are of strategic significance for Russia, and strangle the future of the energy sector as the pillar of Russia’s economy. The sustainable development of the energy industry is not only about the future of Russia, an important pole in the multi-polar world; it will also directly affect the China-Russia energy partnership. If the development of Russia’s energy industry is impeded, it is likely that stable energy input from China’s northern and western neighbors will be reduced, adding variables to its energy security and sustainable development. The role change of China in foreign economic cooperation as well as its stronger investment capability and financial channels can make up for and ease the financial bottleneck of the development and transformation of Russia’s energy industry. There will be constant demand for foreign energy due to China’s economic development. China will be the direct beneficiary if Russia realizes the modernization of the energy sector. As far as the development trend is concerned, the complementarity in the energy sector between the two countries will be more prominent, which will drive the financial cooperation between them in the future, and make it a new highlight of economic strategy matching and a relationship of mutual benefit. The interaction between and integration of the “Look East” agenda of Russia’s international strategy and China’s Asia-Pacific strategy are in line with the long-term strategic interests of both sides, which will add new driving forces for both Russia’s substantive development of the Far East and engagement in the Asia-Pacific economy, and China’s rejuvenation of its northeastern region, achieving mutual benefits, win-win results and common development. China-Russia cooperation in the Asia-Pacific region will become a new point of convergence for their economic and security interests in the new era. During President Xi Jinping’s visit in May 2015, China and Russia signed the Joint Statement on the Integration Cooperation of Silk Road Economic Belt Building and Eurasian Economic Union Building, which is a new achievement in the development of their bilateral relations and their joint efforts to maintain regional prosperity and stability. It has also opened a new window of opportunity for their economic interaction and mutually beneficial cooperation in Eurasia between China and Russia.

 

Fourth, the unique and sound cooperation mechanisms of the two countries will be more effective in safeguarding the interaction and deeper cooperation between China and Russia.

Over the 20 years since the establishment of diplomatic ties, China-Russia relations have withstood severe tests from major events, with the mutual understanding between the two peoples becoming more realistic and objective, and political mutual understanding and trust reaching a high level. Meanwhile, their dialogue and cooperation mechanisms at various levels have become increasingly sound, in particular, the specially established energy consultation and working mechanism at the deputy prime minister level has yielded remarkable results. These effective institutional arrangements will strengthen China-Russia economic cooperation and release the potential of economic complementarity.

 

Prospects of the China-Russia Energy Strategic Partnership

 

The China-Russia energy strategic partnership has been on a fast-track of healthy development, with great effects achieved in both the scale and quality of cooperation. However, there is still huge room for improvement compared with the expectations and potential of the two countries. Under new historical conditions, bilateral energy cooperation is facing rare opportunities for development, and its significance for ensuring the development and security interests of the two countries has been further highlighted. Both sides should make full use of the favorable opportunity of signing the Joint Statement on the Integration Cooperation of the Silk Road Economic Belt Building and Eurasian Economic Union Building, identify priorities, accelerate the integration of energy cooperation programs, and earnestly and effectively step up the process of energy cooperation, making it truly a cornerstone for the China-Russia strategic partnership of coordination. In the future, both sides should strengthen work in the following areas:

 

1. Properly handle the interests of both sides with the idea of cooperation and win-win results

Win-win outcomes are the prerequisite of the bilateral cooperation, which means that each country’s interest demands are met. As two major countries, China and Russia share extensive common interests. However, they have different national conditions and focuses, and differences in their interests are inevitable. Cooperation requires not only seeking common ground while shelving differences, but also, and more importantly, seeking common ground while dissolving differences. For a long time, the reason why China-Russia energy cooperation has suffered from twists and turns is that consensus has been hard to reach amid all their economic demands and disputes. To face up to their differences in interests, focus on the other’s demands, resolve their differences on the basis of mutual understanding and accommodation, and establish new converging points of interest, these are, more often than not, the reasons why China-Russia energy cooperation could overcome various difficulties and eventually achieve breakthroughs and success in the past. This is historical experience, as well as an important inspiration for future cooperation on both sides. China and Russia should properly handle the following interest relations in line with the principles of long-term cooperation, market-orientation, mutual benefits and win-win results:

First, coordinate policies towards Central Asia. Both China and Russia are neighbors of Central Asian countries. Whether to adopt an open or closed policy towards these countries relates not only to their own political and economic relations with them, but also the development prospects for the region. The old thinking of pursuing “sphere of influences” will impede the development of one country itself and the whole region. Instead, adherence to the notion of openness and cooperation is not only an indispensible factor for regional economic development; it will also open a broad space for China-Russia cooperation. Under the precondition that the realizing of the Silk Road Economic Belt and Eurasian Economic Union are integrated, both sides should step up discussing ways and fields of cooperation, identify key programs, policies and measures, explore breakthrough points for strategy integration, and strive to make the first steps in substantive cooperation. China and Russia can actively coordinate their policies and jointly carry out cooperation with Central Asia under the framework of bilateral relations. They also need to work together for the development and prosperity of Central Asia under the multilateral framework of the Shanghai Cooperation Organization. The cooperation bonus brought about by the principles of openness and win-win results upheld by the Silk Road Economic Belt will help eliminate Russia and Central Asian countries’ doubts about China’s economic “expansion.” Both countries can work together to help Central Asian countries construct roads, water conservancy and electric power infrastructure, and other infrastructure related to people’s livelihoods. Enterprises in China, Russia and Central Asia should be encouraged to cooperate in major programs in the region, and strive for mutual benefits and multi-win results.

Second, coordinate upstream and downstream industrial cooperation in the energy sector. The energy industry involves prospecting and development in the upstream, transport in the midstream, and high value-added refining and marketing in the downstream. Trade in energy is only a preliminary stage of international energy cooperation. China-Russia cooperation in projects such as Tianjin Refinery and the Yamal gas field’s liquefied gas has begun their cooperation in the upstream and downstream of the energy industrial chain. By opening up its downstream industries to Russia, China has actually left larger room for high added-value for Russia. And Russia’s further opening its upstream cooperation will guarantee a long-term and stable energy supply to China at reasonable prices. The in-depth cooperation in upstream and downstream sectors of the industrial chain will bond the interests of China and Russia together, and greatly enhance the level of their bilateral energy cooperation.

Third, coordinate differences in the pricing of energy. Differences in pricing have always been an important obstacle hindering the implementation of inter-governmental agreements and enlargement of trade. Although it is the enterprises that carry out pricing negotiations, the two governments exert considerable influence on the negotiations as these energy enterprises are all state-owned or state-controlled. In the context that energy supply is bigger than demand worldwide, the two governments can make efforts to promote reasonable pricing between the enterprises on both sides. It should also be noted that the price of imported oil and gas not only concerns huge economic interests of China, but also serves as a key factor affecting the fiscal balance and economic and social stability of Russia. And Russia’s stability means is also important to China. Therefore, in the negotiation on prices, both countries should uphold mutual understanding, compromise, and flexibility, which is consistent with the development interests of both.

In addition, as the main way of pricing for the international trade in natural gas, long-term agreement pricing is likely to be replaced by market-oriented pricing in the end, as this seems to be an inevitable trend. As major consumers and producers of natural gas, China and Russia can take the lead in exploring a market-oriented pricing mechanism for natural gas, which will lay the foundations for the two countries’ position in the global natural gas pricing mechanism in the future. Against the backdrop that that the US is trying to increase its shale gas exports, the joint efforts by China and Russia to promote a market-oriented pricing mechanism for gas are essential for improving the position of emerging economies in global energy governance.

 

2. Further deepening practical energy cooperation

To constantly improve the quality and quantity of cooperation programs is an inherent requirement of energy cooperation. Both sides need to strengthen cooperation in the following areas:

First, fully fulfill and implement existing agreements, and continue to expand the scale of cooperation in the trade of energy. There are still some agreements on trade in energy between China and Russia not implemented due to their differences on issues such as pricing, and there is big room for improvement. On the basis of mutual benefits and win-win results, the two countries should step up negotiations on the prices of oil and gas, earnestly implement and fulfill existing agreements on their trade in energy, and take full advantage of high-tech to further expand their cooperation in fields such as electric power, nuclear energy and coal, and consolidate and expand the achievements they have made. Through the regular consultation mechanism between the Chinese Premier and Russian Prime Minister, both sides can promote trade in various fields of the energy industry between enterprises, and strengthen their interdependence. Local currency settlement is an important area of bilateral economic and trade cooperation in recent years. In order to meet the needs of political and economic development, the two countries should stick to that direction, conclude it in a timely manner, and gradually expand the scale and scope of local currency settlement in their bilateral trade.

Second, speed up the building of connectivity in the energy industry. China and Russia are each other’s largest neighbor. Linked by the same mountains and rivers, the two countries share a common border of 4,300 kilometers, which is the unique advantage of bilateral energy cooperation. As the most convenient, secure and economical way of transporting energy, cross-border oil and gas pipelines are widely used in the world today. But for a long time, the transport of energy between China and Russia was limited to ways such as railways, and oil and gas operating pipelines directly connecting the two sides was absent. In recent years, although the one and only oil pipeline has been completed, and the eastern gas pipeline is under construction, compared with the tremendous scale of their energy cooperation, the layout of oil and gas pipelines seems to be the simple solution to their needs; other transport means are comparatively backward and cannot meet the demands of their energy cooperation; especially since the maritime transport capacity is yet to be fully developed. The lack of pipelines has become a constraint on expanded the energy cooperation between the two countries. Both sides should overcome the challenges, complete on schedule the already agreed natural gas pipeline in the east, and begin the gas pipeline project in the west, promote new agreements on the construction of gas pipelines, and establish a convenient oil and gas pipeline network connecting both sides. At the same time, attention should be paid to the study and analysis of maritime transport channels including the northern routes, so as to diversify transport means at the earliest date. The China-Russia power bridge should be jointly built by adopting advanced UHV power transmission and transformation technology and equipment, so that the envisaged Northeast Asia power circle can be realized, and so that energy transport capacity can be significantly improved. Promoting the construction of transport infrastructure is the substance of the Silk Road Economic Belt, as well as the urgent need to expand China-Russia energy cooperation. The two countries should integrate the Far East development strategy and the Northeast rejuvenation strategy, renew their infrastructure cooperation in Siberia as soon as possible, and promote the modernization of Russia’s railway. Meanwhile, China and Russia should join hands to step up the infrastructure building of ports, streamline procedures, and constantly optimize the customs clearance environment.

Third, carry out in-depth cooperation on energy technology. China and Russia enjoy broad prospects for their cooperation in non-traditional oil and gas prospecting and development, as well as the development and utilization of new energy technologies. China’s prospecting and development technology for shale oil and gas is becoming more and more mature with abundant capital; Russia boasts large reserves of shale oil and gas, with obvious advantage in terms of production-reserve ratio. With the expansion of trade in energy and the construction of transport corridors, energy cooperation between the two countries will be further deepened. In terms of nuclear energy cooperation, the two countries can promote water reactor technology, floating nuclear thermal power station and fast reactor programs. In the field of new energy technology, the two countries also have large room for cooperation. For example, Russia has made plans to upgrade its public transport, and realized replacement of oil by gas. It has lowered gas-related taxes and imposed zero tariffs on electric cars. China’s new energy vehicle technology is relatively mature and has strong investment capacity. Cooperation between Chinese and Russian new energy auto companies is being gradually established, and Russia has also provided policy support in terms of taxation and land. The use of new energy technologies is burgeoning. In particular, the awareness of energy conservation and environmental protection is improving. So it is going to be a cooperation field with bright prospects. What should not be overlooked is that the two countries can strengthen their cooperation in the research and development of prospecting and refining equipment. In this regard, each side has its own advantages. China and Russia should carry out mutual learning and borrowing, research and develop cutting edge equipment with independent property rights, and shake off their chronic dependence on the advanced equipment of the West, and jointly explore business opportunities in this field.

In addition, the enterprises of the two countries should also attach importance to innovating energy cooperation patterns, so as to accommodate the reality of the constantly enlarging scale of energy cooperation. More innovation and practice needs to take place in areas such as trade settlement measures, financing means and channels, replacement of interests and projects, technology and equipment R&D, and the construction of industrial parks.

 

3. Approaches to guarantee the improved and strengthened strategic partnership on energy

First, China and Russia should plan and coordinate energy cooperation from a strategic height. Energy cooperation covers many areas, over long periods and on a large scale. Therefore, it is closely associated with the long-term strategic interests of countries, which speaks volumes for the significance of making overall strategic planning. In recent years, China and Russia have signed super large agreements with long time frames on oil and gas, electric power and nuclear energy, which serve as good examples for future cooperation. With the deepening and expansion of cooperation, there will be more large-scale programs in all aspects of the energy industry. Considering the wide coverage and long time range of China-Russia energy cooperation, the two countries should draw up a special plan for their strategic energy cooperation in a timely manner. From the perspective of long-term cooperation and balance, the plan needs to take into account the following factors: Firstly, the plan should adapt itself to the changes in their internal situations and the external situation. In particular, previous arrangements should be appropriately adjusted and enriched according to the new situations and conditions, such as Russia’s Far East development and China’s Northeast rejuvenation strategy, as well as the needs for building the China-Mongolia-Russia Economic Corridor. Secondly, the plan should be based on the large picture and from a strategic height. Efforts should be made to improve both the operation of single large-scale projects, and the overall balance and links between different sectors of the energy industry. While priorities are clearly identified, every piece should be arranged as a whole and implemented in a phased manner under the framework of energy cooperation. Thirdly, various relations should be properly dealt with. The two countries should take into account their immediate, partial needs, and their long-term, overall interests; they should identify and seize opportunities and pay attention to and resolve risks; and they should consider their interests and needs. Based on balanced and coordinated plans and the needs of both countries, the integration of the medium and long-term energy development plans of China and Russia can be achieved. Fourthly, efforts should be made to carry out in-depth analysis of cases in which previous plans were hard to implement, summarize the experiences and the lessons learned, conduct tailored and thorough research on the feasibility of key programs, innovative ways of cooperation, market demand, financing plans, insurance measures and such key links concerning the materialization of the programs, and make practical policies and measures accordingly.

Second, China should improve its working mechanism for energy cooperation with Russia. China-Russia energy cooperation is an important cornerstone of their strategic partnership of coordination, and the core link concerning the sustainable development of the economy and society for both countries. Given the importance and special mission of energy cooperation with Russia, China should further improve its working mechanism. While giving full play to and improving the functions of the China-Russia energy negotiation mechanism at the vice prime minister level, the National Energy Commission should take the lead in establishing a working group on energy cooperation with Russia, with the participation of leaders of all relevant ministries, enterprises and think tanks: Resources of different departments dealing with foreign affairs, the economy and trade, finance and scientific research should be mobilized, forming an overall effect on energy cooperation with Russia; different interests between government departments and energy enterprises, and domestic and foreign enterprises should be coordinated; think tanks should be organized and led to study macro-environment issues, such as Russia’s domestic politics, economy, legal system and people’s livelihoods; a special representative for China-Russia energy cooperation should be put in place when necessary to coordinate and implement all the work.

Third, China and Russia should work together to promote the building of a community of common interest in the energy industry. Before Russian President Vladimir Putin came to China in September this year to attend the events commemorating the 70th anniversary of the victory in the world’s anti-fascist war, he said that Russia-China relations “have reached a record level, and continue to move forward.” “Despite all our differences, our goal, to seek development, is the same.”[13] While sharing lots of common interests in the field of energy, China and Russia have the aspiration and foundation for developing long-term and stable cooperation. Facing the challenges of the new century, equal and mutually beneficial cooperation between the two countries can both meet each other’s needs, and achieve common development and benefit sharing, which is in full compliance with both sides’ pursuit of development. The common goal of China-Russia energy cooperation in the future should be to ensure long-term and stable development of their cooperation, and establish a community of common interest defined by a community of common destiny and common prosperity.

 

Source:China International Studies, September/October 2015, pp.81-99.

 



[1]    Shi Ze is Senior Research Fellow and Director of Center for International Energy Strategy at China Institute of International Studies.

[2]Юлия Латынина, «Россия – Сырьевой Придаток Китая», http://ej.ru/?a=note&id=9193#.

 

[3]Zhang Jing, “In Great Need of Long-term Strategy: An Analysis of the Rerouting Crisis of China-Russia Oil Pipeline,” International Trade, Vol 3, 2003, pp.31-34; ИгорьВелетминский, НиколайДзись-Войнаровский, «Китайскоепредупреждение: Из-за дела ЮКОСа растут нефтяные цены и падает объем инвестиций», http://www.newizv.ru/economics/2004-08-12/9319-kitajskoe-preduprezhdenie.html.

 

[4] “Russian Minister of Energy: A Series of Energy Cooperation Agreements Reached between China and Russia,” October 22, 2013, http://www.chinanews.com/GN/2013/10-22/5411643.shtml.

 

[5]“The Russian Government Approved Two Large Investment Programs by Chinese Companies,”  November 14, 2013, http://news.xinhuanet.com/world/2013-11/14/c_118131035.htm; “Russian Minister of Energy: A Series of Energy Cooperation Agreements Reached between China and Russia.”

 

[6] “The Russian Government Approved Two Large Investment Programs by Chinese Companies,” November 14, 2013, http://news.xinhuanet.com/world/2013-11/14/c_118131035.htm; “Russian Minister of Energy: A Series of Energy Cooperation Agreements Reached between China and Russia.”

 

[7]“China-Russia Energy Cooperation: Flourishing Development and Broad Prospects,” March 22, 2013, http://news.xinhuanet.com/2013-03/22/c_124489351.htm.

 

[8]Ibid.

 

[9]Vagit Alekperov, Russian Oil: Past, Present and Future, translated by Shi Ze, People’s Publishing House, 2012, p.357.

 

[10]Ibid, p.349.

 

[11]  Завальный. П. Н, “Sharing the Task of China-Russia Energy Cooperation,” China Energy News, July 6, 2015, 1st edition.

 

[12]“Gazprom: Gas Supply for China through the West Route Expected to Expand,” September 18, 2014, http://news.xinhuanet.com/energy/2014-09/18/c_126999180.htm.

 

[13]“Russia and China are Committed to Defending the Historical Truth of World War II Together: Interview with the Russian President Vladimir Putin,” September 1, 2015, http://news.xinhuanet.com/2015-09/01/c_1116442065.htm.

 

 

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