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First Russian-Chinese Energy Business Forum Opens in Beijing

29 November 2018

Today, the first Russian-Chinese energy business forum has opened in Beijing, the capital of the People’s Republic of China. The format of the event was established in July 2018, upon instruction of Russian President Vladimir Putin and Chinese President Xi Jinping. The mission of the Forum is to develop an energy dialogue between Russia and China, increase efficiency and expand joint projects portfolio, and attract investment.

Representatives of about 90 companies from the energy, financial and IT sectors, political and public figures, diplomats and experts from Russia and China took part in the first Russian-Chinese energy business forum. Among the Forum’s participants from Russia are: Chief Executive Officer of Rosneft Oil Company and Executive Secretary of the Presidential Commission for Strategic Development of the Fuel and Energy Sector and Environmental Security Igor Sechin; President of Transneft JSC Nikolay Tokarev; Chairman of the Board of Inter RAO PJSC Boris Kovalchuk; Chairman of the Management Board of Gazprombank JSC Andrey Akimov; Deputy Chairman of the Management Committee of Gazprom PJSC Alexander Medvedev; General Director of RusHydro PJSC Nikolay Shulginov; General Director of TATNEFT JSC Nail Maganov; Chairman of the Board of Directors of RussNeft Mikhail Gutseriev; President of Neftegazholding JSC Eduard Khudainatov. The event was also attended by Minister of Natural Resources Dmitry Kobylkin, Russian Ambassador to China Andrey Denisov, and many others.

Leading Chinese politicians and businessmen take part in the Forum: First Vice Premier of the State Council of the People’s Republic of China Han Zheng; Director of the National Energy Administration of China Zhang Jianhua; Vice Minister of Foreign Affairs of China Le Yucheng; Vice Minister of the National Development and Reform Commission Lian Weiliang; Chairman of the Board of CNPC Wang Yilin; China Gas President Huang Yong; Jereh President Wang Kunxiao; Alibaba Vice President Liu Xiung; and others.

The Forum was opened by First Vice Premier of the State Council of the People’s Republic of China Han Zheng who read out an address from President of China Xi Jinping. “In recent years, the sides have achieved fruitful results in energy field that have contributed to the socio-economic development of the two countries. The Chinese side is ready to work together with Russia to take the Chinese-Russian energy cooperation to a new level of development,” stressed the President of the PRC in his address to the Russian-Chinese energy forum.

“At the moment, the Russian-Chinese comprehensive strategic interaction and partnership retain a high level of development. Multi-purpose cooperation between our countries is strengthening continuously. In recent years, the sides have achieved fruitful results in energy field that have contributed to the socio-economic development of the two countries,” said Xi Jinping in his address to the guests of the Forum.

“I would like to emphasize that the strengthening of the Russian-Chinese energy cooperation is very important for jointly ensuring energy security and forming the open global economy, amid the rise in unilateralism and trade protectionism,” said Han Zheng in his speech. He called the energy dialogue “the most productive area in cooperation between Russia and China” and stressed the need to create a business-enabling environment and full-scale financial support for joint energy projects. “Cooperation is developing rapidly. And the role of the Russian-Chinese business forum in presenting of the projects, developing and establishing new contacts is crucial,” emphasized the First Vice Premier of the State Council of China.

The address of Russian President Vladimir Putin to the participants of the event was read out by Chief Executive Officer of Rosneft Oil Company Igor Sechin. “The strategic partnership between Russia and China is on the rise,” wrote the Russian President in his address to the forum. “An important part of this relationship is energy cooperation, which has developed significantly over the past years. The area of mutual interests of Russian and Chinese energy companies is quite broad. This is fully confirmed by the eventful and diverse agenda of the Forum, which includes issues related to cooperation in the oil and gas and coal industries, power industry, investment, research and development, and environmental protection.”

In his speech, Igor Sechin noted the significant progress in development of the relations between Russia and China over the past 10 years. So, for example, during the last decade, the commodity turnover between the countries increased more than 2.5 times: from $40 billion in 2007 to $110 billion expected by the end of the current year. During this time, fuel and energy products supply from Russia to China has tripled, and as a result, Russia has become the largest energy supplier of the PRC. Over the past 10 years, more than 300 million tonnes of oil, 55 million tonnes of petroleum-based products, 150 million tonnes of coal, and 20 billion kilowatt-hours of electricity were sent to Chinese consumers.

According to Sechin, Rosneft has made a significant contribution to the cooperation growth by implementing an unprecedented in its scale multi-year project of supplying oil to China together with CNPC. “Last year Rosneft delivered around 40 mln tonnes of oil, thus satisfying around 6.5% of demand for fuel in China. Rosneft recognizes its leading role and responsibility in ensuring China’s energy security,” said Sechin.

To secure the faultless oil supplies, a unique pipeline system, Eastern Siberia–Pacific Ocean, was implemented; Power of Siberia gas pipeline is under construction, as well as the biggest borderline gas-processing plant and gas chemical complex. In addition, there are successful supplies of liquefied natural gas from Yamal fields, and joint projects in coal, nuclear power, and associated areas are being developed. The investment requirement of the energy projects implemented and being implemented in the Russian East to be marketed in China is around $100 billion.

“The energy cooperation contributed to an expansion of the relations in other areas. The trade relations have gone beyond energy supplies. We see the synergy: services of Chinese banks are gaining popularity; there is an opportunity to create vertically integrated chains; we have prospects of joint work on the markets of other countries looming,” noted Igor Sechin in his speech.

According to him, the potential of the Russian-Chinese cooperation in the fuel and energy sector is far from drained. “The leaders of our countries set a task to bring the commodity turnover to $200 million. Mr Wang Qishan suggested creating a regular platform to exchange opinions and projects in order to meet the set challenge as soon as possible and boost the bilateral energy cooperation. His idea gained support of the state leaders. Regular energy business forums are supposed to contribute to reviving of the spirit of the economic relations of our countries,” said Sechin.

In his speech, the Chief Executive Officer of Rosneft Oil Company also stressed the importance of the Asia-Pacific Region - the most prospective with reference to energy consumption growth. The consumption of the crude energy in the Pacific Rim countries will increase 1.5 times by 2040. At that, the annual oil and gas demand of China will grow by 125-250 million tonnes and 350-550 billion cubic metres respectively in the next 20-25 years. Such level of demand can be mostly satisfied with more supplies from Russia. To do that, conditions to attract investments in production and transportation of energy sources need to be created. According to Sechin, joint exploration of oil and gas resources offshore the Arctic and Russian Far East, as well as development of the navigation on the Northeast Passage may become new growing points of the Russian-Chinese cooperation.

“Another promising opportunity is to build a renewables-based power grid complex in Russia’s Far East with the goal of power exports to China. Also, it is possible to expand the cooperation through petrochemistry and gas processing projects. I see great synergy in their joint implementation,” said Sechin.

“Russia sees the prospects of economic growth acceleration mostly related to the rapid development of the eastern territories and exploration of their natural resources. In its turn, China is interested in securing of its energy and establishing of safe supply channels. I think that there are all necessary conditions to take our cooperation to the new level, to make it integral, diversified and spread over those spheres that were not included before,” said Rosneft CEO. He noted that the cooperation between Russia and China should encompass more spheres of integration of delivery chains and localization of the most modern equipment, new systemic solutions, as well as include issues of energy digitalization and project financing.

“Certain aspects of the current political conditions in the world, increasing protectionism and threat of trade wars in the world economy serve as additional incentives to cooperate more closely and make decisions faster,” concluded Sechin.

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 November 29, 2018