Russia and China: A love affair fueled by Oil and Gas

Ocnus.net 2010 ^ | 11/27/2010 | Ocnus.net 2010

[ErnstStavroBlofeld]

Russia and China have enjoyed a close but lopsided economic relationship since the mid-2000s. Beijing sees its giant neighbor to the west rather as little more than a source of energy and other commodities to feed China's rapidly growing economy. The results of recent meetings between senior Russian officials and China's premier Wen Jiabao suggest that the relationship is unlikely to change anytime soon.

Oil, sweet oil

During his November 24 talks with Russian President Dmitry Medvedev, the Chinese premier announced that earlier in the day a total of 13 contracts were signed, worth $8.5 billion in total.

Prime Minister Vladimir Putin, who spoke with his Chinese counterpart ahead of the talks with Medvedev, said that over the year's first eight months, bilateral Russian-Chinese trade had grown by more than 57% on average, with an 83% increase in timber sales, 40% in electricity, and 30% in coal.

According to official statistics in China, exports of Chinese machinery and electronics to Russia grew over this same period by 96.6%. Russia also exports high-tech products into China, but most of them are related to the energy sector.

Energy has been, by far, the most prominent issue on the two countries' bilateral economic agenda in recent years. The most high-profile project is the Eastern Siberia-Pacific Ocean (ESPO) oil pipeline and its offshoot linking Russia's coastal town of Skovorodino and the Chinese border town of Mohe. Fuel prices and Russian gas deliveries to China are also high on the agenda.

Beijing is extremely interested in diversifying its energy imports. At the moment, its fuel needs are met mainly by imports from Gulf countries, such as Iran and Oman. This makes Chinese energy policy heavily dependent on U.S. and EU policies, hence China's heightened interest in the energy wealth of Russia and Kazakhstan.

[ZULU]

There hasn’t been a romance like this since Hitler and Stalin.

[raybbr]

This is why they separated from the dollar - so they could conduct business and trade goods and commodities instead of money. And, we can be assured that they are keeping the “price” down for themselves and charging us another rate for the same products.

[ponder life]

Sending energy resource to China will be done by most nations with a large land mass. Keep your eye on future US coal exports to China. That too, will be a match made in heaven.