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2022-10-01 China-Japan-Koreas
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The Chinese Communist Party (CCP) is reselling energy supplies from Russia to Europe in a bid to increase its influence.
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[EpochTimes] Since the Chinese and Russian leaders met at the Shanghai Cooperation Organization summit in early September, a series of moves show that Beijing and Moscow have strengthened their energy cooperation.
 Russian Energy Minister Alexander Novak confirmed to Russian television station RossiyA-1 on Sept. 15 that the Force Siberia 2 gas pipeline to China will replace the Nord Stream 2 pipeline to Europe, which was shut down during the Russia-Ukraine war, and deliver 50 billion cubic metres of gas a year to China. That is close to the 55 billion cubic meters of annual capacity of Nord Stream 2 and Nord Stream 1. Construction of the new pipeline will begin in 2024.
The annual capacity of the Force Siberia 1 pipeline from Far East Russia to China, which opened at the end of 2019, will also be increased to 20 billion cubic meters this year and to 61 billion cubic meters by 2025.
Continued from Page 5
By then, the combined annual capacity of the two pipelines to China—111 billion cubic meters—will be comparable to the combined capacity of the two pipelines to Europe—110 billion cubic meters—and the new pipeline to China will be integrated into Russia’s domestic gas network, allowing gas originally destined for Europe to be diverted to China.
The route, along with the existing Nord Stream pipeline, will double annual export capacity to 110 billion cubic metres, which is around half of Russia’s annual total gas exports to Europe.
Just two weeks earlier, Russia indefinitely suspended the Nord Stream 1 pipeline in Europe on Sept. 2. On Feb. 22, two days before Russia invaded Ukraine, Germany suspended the approval process for the Nord Stream 2 pipeline due to tensions with Russia.
In addition, two state-owned companies, China National Petroleum Corporation (CNPC) and Gazprom, announced on Sept. 7 that Russian gas supplies to China would be paid fifty-fifty in RMB and roubles.
This move avoids using dollars and euros, thus cushioning Western financial sanctions against Russia while allowing the Chinese Communist Party (CCP) to avoid secondary sanctions.
CCP RESELLS GAS TO INCREASE ITS INFLUENCE IN EUROPE
Russian pipeline gas sales to China rose nearly 65 percent in the first half of 2022 compared to 2021. Since Russia’s invasion of Ukraine, China’s spending on energy imports from Russia has soared to $35 billion from $20 billion a year ago, according to Bloomberg.
Meanwhile, in the first eight months of 2022, China’s liquefied natural gas (LNG) exports have also reached record levels, with Chinese companies already selling 4 million tons of LNG on the international market, which is equivalent to about 7 percent of Europe’s gas consumption in the first half of 2022.
Jovo, a Chinese LNG trading company, said it had resold one LNG deal to a European buyer. The Nikkei quoted a futures trader in Shanghai as saying the profit from such a trade could be as much as $100 million.
Sinopec, China’s state-owned energy company, also said it had been sending “surplus” LNG to the international market. The company has sold 45 cargoes of LNG, or about 3.15 million tonnes.
In the first eight months of 2022, China exported $164 million of LNG to Europe and $284 million to countries such as Japan and South Korea that are participating in the energy embargo against Russia. In 2021, China exported only about $7 million in LNG. Even if assuming a 10-fold increase in prices, the increase in China’s gas exports is still huge.
According to Wang Yongzhong, director of international commodities Research at the Institute of World Economics and Politics of the Chinese Academy of Social Science, constrained by transportation and infrastructure such as pipelines and receiving stations, it is difficult for Europe to import large quantities of LNG from countries such as the United States, Australia, and Qatar in the short term.
Chinese media said on Sept. 2 that LNG carriers had become a “bottleneck” in solving Europe’s energy crisis and that China had about 100 LNG ships available for exporting.
The flow of Russian gas through pipelines to Europe has fallen to less than 20 percent and continues to fall. By January 2023, it could stop altogether.
According to the European Union’s energy information platform, AGSI, Europe had more than 91 percent of its natural gas reserves as of Sept. 24. That’s earlier than the 80 percent expected by November, and depends in part on Chinese exports of LNG.
However, facing a cold winter ahead, Europe still needs to buy LNG on the spot market to wean itself off Russian gas, even if it has to pay more.
Frank Tian Xie, a marketing professor at the Aiken School of Business at the University of South Carolina, said Europe could become dependent on the CCP for energy to wean itself off Russia.
“It suddenly gives the CCP new leverage,” he told The Epoch Times. “The CCP now has the ability, and the possibility, to cut off gas supplies to Europe in response to Russian demands.”
EIGHT-YEAR HISTORY OF CHINA-RUSSIA ENERGY COOPERATION
Russia was hit with Western sanctions over its seizure of Crimea in May 2014. After that, CNPC and Gazprom signed a 30-year deal worth $400 billion, including the construction of the Siberian Force 1 pipeline. Completed in 2019, the pipeline will increase its capacity to 20 billion cubic meters in 2022.
According to Chinese media, Chinese energy companies pocketed the difference by reselling “excess” LNG on the international market. In the first half of 2022, imports of piped natural gas from Russia rose 63.4 percent from a year earlier, leaving a glut of liquefied gas.
Xie said China’s sluggish economy and lower energy consumption gave Chinese energy companies an excuse to resell cheap gas imported from Russia.
Oil is an energy source in greater shortage in China. China has imported a record amount of oil from Russia for three consecutive months from June, including 8.475 million tonnes (9.34 million tons) in August, up 28 percent year on year.
However, Ursa Space Systems, a satellite data company, found in mid-September that crude inventories in China had fallen by another 7.5 m barrels from the previous week, the fourth decline in five weeks. Meanwhile, Chinese state refiners and traders have applied for an additional 15 m tonnes (16.53 m tons) of export quotas.
China has also sharply increased its coal imports from Russia. Chinese imports of Russian coal rose to 8.54 million tons last month, up 57 percent from a year earlier.
Li Yanming, a China expert based in the United States, believes that the more Europe is desperate for its energy supplies, the more the CCP will be able to influence Europe.
“With Russia under international sanctions and the CCP’s growing international isolation, Beijing and Moscow need to stick together to fight the West,” Li said.
“But it’s clear that the CCP has the most to gain. Other than taking advantage of Russia’s desperate search for new markets to capture its vast quantities of cheap energy and secure its position in the global energy crisis, it can avoid the secondary sanctions caused by the violation of Western sanctions against Russia.”
“It can also make profits from reselling, making Europe, which is in an energy crisis due to the sanctions against Russia, dependent on it, thereby strengthening its strategic leverage against the United States and Europe.” 
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Posted by NoMoreBS 2022-10-01 00:00||
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