Russia pursuing extensive energy cooperation with China: Deputy premier

Moscow, Beijing working on initiatives to avoid using SWIFT system for bilateral payments, says Alexander Novak.

Russia pursuing extensive energy cooperation with China: Deputy premier

Moscow is seeking wide-ranging cooperation with Beijing in the energy sector, Russia’s Deputy Prime Minister Alexander Novak said on Tuesday.

Russia and China plan to jointly develop and produce equipment for the energy sector, while Moscow also expects Chinese partners to take part in the construction of a liquefied natural gas plant in the Ust-Luga area of the Leningrad region, Novak said at the 4th Russian-Chinese Energy Business Forum in Moscow.

“China is one of the key manufacturers of equipment in the oil and gas sector. There is already close cooperation on the supply of oil and gas equipment for projects in Russia. We plan to jointly develop and produce equipment that can be used both in China and in Russia,” he said.

Russia is also interested in expanding cooperation in oil production and will consider Chinese partners’ proposals to join in the development of Russian oil fields, he added.

Novak confirmed that discussions are ongoing on a potential gas union between Russia, Kazakhstan, and Uzbekistan, as well as cooperation in transportation, exports, and other sectors.

“We have great opportunities to expand mutual cooperation, including on gas supplies and processing for deliveries to other export destinations,” he said, identifying China as one of the possible destinations.

He said Russia and China are also actively cooperating in the financial sector, with initiatives such as opening company accounts in each other’s banks to avoid using the SWIFT payment system.

The two sides have switched to payments in yuan and rubles for gas, and plan to expand that to oil and coal, he added.

On plans for price caps on Russian oil, Novak said Moscow will not supply oil on those terms even if it were more profitable.

“This is unacceptable in principle from the point of view of concluding contracts. We will work according to the market,” he asserted.

Novak said Western sanctions on energy resources are “ill-considered,” warning that the price cap plan poses huge risks for the global energy market, including a shortage of resources and investments in the sector.

“The recent restrictions, the decisions to implement price caps – all these actions entail huge risks for the industry, causing a shortage of energy resources and investments … and not only in the oil industry,” he said.

“This will affect any trade commodity for which Western countries will want to introduce their own rules in the future,” he added.​​​​​​​