Russia has sharply increased the pressure in oil and gas pipes to China (January 20, 2023)
According to the General Administration of Customs of China, oil supplies to Russia in China in 2022 increased by 8.2% and amounted to 86.24 million tons. At the same time, TASS writes, with reference to the materials of the department, the cost of the energy carrier purchased by China from Russia increased by 43.9% in 12 months compared to 2021, to $58.37 billion. In 2021, Russian oil imports to China amounted to 4.5%, amounting to 79.64 million tons.
By the end of 2022, Russia was in second place in the share of participation in China. In December, China purchased 6.47 million tons of oil from Russia (down about 17% from the delay). At the end of 2022, only Saudi Arabia leads the supply of oil to China, which sold 87.48 million tons for $64.97 billion (the physical volume remained virtually unchanged compared to 2021, the cost increased by 47.8%). Following Russia in terms of choice to China are Iraq (55.48 million tons for $39.09 billion) and the UAE (42.77 million tons for $32.24 billion).
At the same time, supplies of liquefied gas (LNG) from Russia to China in 2022 increased by 43.9%, to 6.5 million tons. In value terms, imports grew 2.4 times, exceeding $6.74 billion. According to the law of LNG purchased by China, Russia is in 4th place. The top supplier of liquefied natural gas dollars to China in 2022 is held back by Australia (21.85 million tons, $15.98 billion), followed by Qatar (15.69 million tons, $11.54 billion) and Malaysia (7.36 million) . tons, 6.81 billion dollars).
As for the probabilities of pipeline gas from Russia to China, in 2022 they increased by 2.63 times, and their cost amounted to $3.98 billion, an increase of 2.63 times. In December, the level of mass flow in China in monetary terms reached 434.38 million dollars, decreasing compared to an increase of 3.3%.
Among the states that sell pipeline gas to China, Turkmenistan continues to occupy the first place: in 12 months, deliveries from this country to China reached $10.25 billion in value (an increase of 51%). Russia is in second place, followed by Myanmar (up 1.3% to $1.43), Kazakhstan (down 4% to $1.08 billion) and Uzbekistan (up about 33.9%, up to $1.07 billion).
We will download
As for oil, the growth in supply in China in 2022 is due to discounts due to assumption, Oksana Lukicheva, an analyst for commodity markets at Otkritie Investments, believes. She believes that this is normal, since Russia won on price. Moreover, in December, after setting marginal prices, the Chinese were afraid to buy oil – this was reflected in a drop in demand, similar to Lukichev.
In 2023, she believes, an increase in the likelihood of implementation in China will be detected. Moreover, demand is growing on their part, because the Chinese have begun deliveries of diesel to Europe.
In the case of LNG, the analyst continues, the increase in probability from Russia is also due to price discounts. In addition, there is a shortage of gas on the market in the summer and autumn of 2022. There was a redistribution of probabilities due to increased demand in Europe. In December, a normal decrease, a deepening due to the weather, formed.
In 2023, Oksana Lukicheva believes, the growth in the number of energy suppliers from Russia to China will depend, although everything, of course, will depend on prices. For oil, they are expected to grow, and for gas, for the time being, they will decline due to growing supply and falling demand. Seasonal risks, one way or another, diseases.
Deliveries will be. The rest is a matter of price
Evgeny Mironyuk, an expert on the financial market at BCS World of Investments, highlights high discounts on certain weeks, especially towards the end of 2022.
For Russia, this is important: to preserve the Chinese market and not to reduce the price of delivery. The second reason is logistical: finally, at the end of last year, a fleet was formed to replace the volume of tanks that had previously passed to the West. This also gives rise to their unevenness: shipments will continue to fluctuate from week to week, depending on the rhythm of sending tankers.
BCS expects income growth in Russia by 100 thousand rubles. barrels – up to 10.2 million barrels per day. by the second quarter of 2023 (q/q). Production and exports will fully recover by the end of 2023. It should be chosen, expert, that Russia should not increase the volume of oil previously received in the West in other countries (primarily China).
Now the ability to buy pipeline oil without severe restrictions on the price of reserves is Slovakia, Hungary, the Czech Republic, countries that have immediate access to alternative offshore oil supplies and are highly dependent on pipeline availability, as well as Bulgaria and Croatia.
As for China, the geography of LNG supplies to China is quite diversified. Therefore, Yevgeny Mironyuk does not expect such a rapid growth in LNG consumption in China as in 2022 – they will grow moderately. The fact is that, to a large extent, the logistical reasons for Russia’s competition will continue to win Australia, Malaysia, Qatar.