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6 June 2019

Smooth road ahead

This March, Li Keqiang, Premier of the State Council of China, urged to double the trade turnover between China and Russia, which last year had already crossed $100 billion, a record mark in the 70-year history despite the downward trend in global trade. The turnover is expected to grow through expanding cooperation in such areas as large industrial projects, space and aviation industry. The experts from two countries discussed the prospects for the development of multi-level business relations between Russia and China in the energy sector on May 30 at the special session of the Fifth Conference «Russia and China: Cooperation in a New Era», organized in Moscow by the Russian International Affairs Council (RIAC) and the Chinese Academy of Social Sciences (CASS) in collaboration with CREON group and China-Russia Friendship Association. Representatives of companies like COSCO, CGGC, TCC Group, Rosatom, Rosneft, RussNeft and many others took part in the event to find opportunities and new points of growth.

«The development of joint projects in petrochemical industry and related logistics sector can help achieve the goal of doubling the turnover between our countries», said Sandjar Turgunov, General Director of Creon Energy when opening the special session «Development of broad and multi-level business cooperation between Russia and China in fuel & energy sector and other areas». «It is widely known that Sino-Russian cooperation in the oil sector enjoys tremendous success, but we still need to work on projects in the gas sector, as well as on the development of deep oil & gas processing projects», added Mr. Turgunov.

The participants of the event are convinced that it is necessary to promote the development of liquefied gas projects. In particular, Igor Berezin, CEO of Avestra (Beijing) Chemical Commerce Trading, presented the joint Sino-Russian project with a total cost of $70 million: a terminal for LPG transshipment in Manchuria with total transshipment capacity after the launch of the second stage of 3 million tons per year. If agreements between Avestra, Gazprom and Chinese partners on the supply of liquefied petroleum gas in cryocontainers are reached, the parties will be able to avoid additional costs for construction of related infrastructure in the unloading zones. «This terminal will increase the share of LPG imports by 15% and will provide for the annual growth of trade turnover by $2 billion», said Mr. Berezin.

Alexander Neklyudov, Director of Atomenergoprom Project Office, presented the progress of the Northern Sea Route project aimed at establishing international cargo transit. The project intends the use of hub ports for transshipment of international transit cargo through feeder lines to the Arctic fleet for further transportation on the Europe-Asia-Europe route. The IRR of the project in nine years will reach 27%. At the moment, Rosatom is in search of international logistics operators, forwarders on the spot, and investment partners for attracting resources to the project.

Representatives of CGGC, COSCO and TCC spoke about completed and scheduled projects in the territory of the Russian Federation. For instance, Wei Da, Director of the Moscow branch of TCC Group, emphasized that «Tianchen has successfully completed more than three thousand EPC contracts for large and medium inter-industry projects in China and abroad, and we are looking forward to further cooperate with Russian partners in order to promote the development of the petrochemical industry in both countries».

China remains one of the most important partners for Russia in the field of fuel and energy, Russia in turn has remained the largest exporter of crude oil to China for several years. According to Shi Dan, Deputy Director of the Industrial Economy Institute of the Chinese Academy of Social Sciences (CASS), «China’s ability to self-supply energy resources decreases every year», but no matter how oil production develops at the domestic level, Russia will always be able to cover the shortage. The growth of demand, the development of transport infrastructure, the implementation of joint investment projects are all prerequisites for even greater cooperation between Russian and Chinese companies in the field of energy.