Strategic outlook
After over 20 years of negotiations, the China-Russia gas deal has become a matter not just of business, but of diplomatic importance between the two neighboring giants.
Xia stressed that China has been diversifying its sources of energy imports with the aim of boosting energy security, with Russia playing a key role. China's energy imports strategic layout extends north to Russia, west to Central Asia, and includes important shipping routes from other sources. The gas deal with Russia will greatly cut down on China's energy reliance on the Middle East, added Xia.
Due to its high-speed economic growth, China's demand for energy has been on the rise in recent decades. In 2013, China's oil demand increased 8 percent, while its thirst for natural gas grew over 26 percent, said Xia.
According to a report of the CNPC Economics and Technology Research Institute, China's crude oil and natural gas external dependence had reached 58.1 percent and 31.6 percent respectively in 2013. China has now become the third biggest natural gas consumer in the world, with a consumption of 167.8 billion cubic meters in 2013—a 13.9-percent year-on-year increase. Last year, China imported 53 billion cubic meters of natural gas. The report predicted that China's natural gas consumption will see an 11-percent growth in 2014, reaching 186 billion cubic meters.
Xia explained, "China's plan to address air pollution, especially smog, within the next 10 years, will demand a greater gas supply to replace current coal consumption." In accordance with China's mid-term development plan, it will import at least 80 billion cubic meters of natural gas from Russia and Central Asia.
Russian experts claimed that the deal highlights the enhanced state of bilateral relations.
Evgeniy Konygin, Chairman of Sub-Committee for Energy Efficiency and Renewable Energy of Russian Union of Industrialists and Entrepreneurs, pointed out that the two sides are currently very clear about current world political and economic conditions, and that the two can cooperate on new energy projects, an area where China has many technological advantages.
Energy cooperation between China and Russia is not a response to Europe's steps to move away from reliance on Russian natural gas, said Sergey Pikin, Director of Energy Development Fund, adding that the bilateral cooperation of energy is a corollary. He stressed that the two countries had signed many contracts prior to the expected agreement.
A shared desire to increase their economic strength and advance the principle of reciprocity is at the root of current bilateral economic cooperation efforts, he said.
Pikin concluded that having been the most rapidly developing economy in the world for the past decade, China's energy demand has risen in tandem. "Russia, one of the major energy providers in the world and a neighbor of China, is a better choice for China due to the lower cost of energy logistics," he said. Besides, Pikin explained, Russia has the capability of exploiting low-cost energy projects, compared with other sources—an added benefit for developing economies such as China.
"It's normal for a big developing country and a world major energy supplier to strengthen energy cooperation," said Sun. "Such a deal will benefit both sides."
Chinese and Russian experts suggested bilateral energy cooperation can be extended to a wider range of endeavors.
Konygin proposed strengthening cooperation of energy-related technologies. "China has made tremendous achievements on new and clean energy exploration, such as wind and solar power. Russia intends to increase its own new energy supply. There are bright prospects for them to promote related technological cooperation," said Konygin.
Pikin suggested that the two sides should also strengthen cooperation of energy exploitation in the Arctic and continent shelf. He pointed out that the Arctic possesses over one third of the world's energy reserves, and Russia has an oil field there already.
"China is a well-known processing giant. It has great advantages in producing energy exploitation facilities," said Xia. "We can manufacture all kinds of exploitation facilities and drilling platforms—and our prices are 50 to 60 percent lower than European and U.S. products of equal quality."
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