The alleged” no-limits” agreement between China and Russia has come to a standstill over the price of electricity and natural gas, sparking concerns about the viability of the larger strategic alliance. & nbsp,
Due to China’s refusal to pay a 7 % price increase, Russian state-owned energy company InterRAO has limited power supplies to the northern region of the country since the beginning of this month.
While Beijing and Moscow haggle over fuel load prices, China has also reportedly refused to give final authorization for the 2 Power of Siberia pipeline initiative, which is intended to send Russian natural gas to China via Mongolia. & nbsp,
Outside of the Eurasian Economic Union, which includes Russia and several other former Soviet says, China is the largest export market for power in Russia.
Russia announced last month that export taxes related to the franc exchange rate would be applied to a variety of goods, including oil and gas. If the rouble is weaker than 80 US dollars, which it is currently trading at around 98 to the dollar, the duty rate will range from 4 % to 7 %, according to reports by Reuters.
For users in China, Mongolia, Azerbaijan, and the independent Greek region of South Ossetia, InterRAO announced in late September that electricity prices would increase by 7 % on October 1.
While pointing out that Russia sells crude petrol to India at a higher discount than it permits China, some Taiwanese critics have argued that the country’s increase in electricity prices is ridiculous. & nbsp,
The Russian ruble had been floating at about 75 francs per penny for about two years prior to the start of the Russia-Ukraine war in February 2022. The rubles, yet, fell to 134 per dollar in March of last year as a result of American sanctions, but it quickly recovered to 54 in June as concerns about sanctions’ effectiveness grew. & nbsp,
The franc has been trading at around 100 since August after easing back to around 80 in April of this year. & nbsp,
The InterRAO claimed that conversations with Mongolia, which consented to pay the higher costs, were powerful on October 2. While discussions are ongoing, the state company has begun to inflict some supply restrictions, according to its statement that it is still in talks with China.
Lu En, a Fujian-based author, wrote in an article that was published on October 4 that” even though China and Russia are deepening their participation in some areas, it does not imply that their interests are fully aligned on all problems.” ” We can see this intricate activity from Russia’s numerous price adjustments in the oil and gas supply, in addition to electricity prices.”
According to Lu,” China runs the risk of relying on a single power supply, particularly when it comes to power supplies that have an impact on the nation’s lifeline.”
He argued that China should not be long-term interested in Russia’s most recent increase in electricity prices and urged Beijing to maintain a diversified supply chain while constantly boosting its strategic energy reserves.
According to some other commentators, it’s common for China and Russia to agree on specific trade agreements. & nbsp,
A writer who goes by the pen name” Qianliyan” and claims to be an associate professor at the College of Literature and Journalism at China’s Sichuan University says in an article,” When dealing with external trade, the Chinese government has always been very rational and has a clever mind.” & nbsp,
Organization is one thing, connection is another. He claims that this should be the appropriate stance. Putin, the chairman of Russia, actually made no requests of China. We are aware that the energy field has remained involved in the negotiations regarding the electricity price increase, which have not yet been brought up to a political level.
A few agreements, such as light import prices or the price of natural gas in the 2 Power of Siberia initiative, which is intended to deliver Russian oil to China via Mongolia but is still under talks, won’t jeopardize China and Russia’s” great friendship ,” according to Qianliyan. He suggests that there shouldn’t be an exaggeration of Sino-Russian industry conflicts.
shortage of power
Through the Blagoveshchensk – Heihe power wires, Heilongjiang province of China has been importing energy from InterRAO since 1992. In 1996 and 2006, two more connectors started running. The three is transport up to 7 billion kWh of electricity annually when combined. & nbsp,
China chose to purchase more energy from InterRAO after experiencing a countrywide power shortage in September 2021. The National Energy Administration reports that in the first three quarters of 2021, Russia’s energy supplies to China increased 1.4 % year over year to 2.38 billion kWh. However, the number increased by 1.64 billion kWh in the final quarter of the same year, resulting in 134 % more energy exports than the anticipated 700 million.
4.1 % of Heilongjiang’s total electricity consumption( 113.9 trillion kWh ) in 2022 came from Russia, whose electricity supplies to China reached a record-breaking high of 4.7 billion KW.
Chinese media has reported that Russia’s energy costs have historically been fiercely competitive. According to them, in 2019, InterRAO sold 3 billion kWh of electricity to China for 776 million yuan($ 108 million ), or 0.26 kilowatts. Power plants in Heilongjiang sold light at 0.374 yuan per kWh during the same time period, 44 % more costly than Russian exports. & nbsp,
The declaration of a” no restrictions” connection between Chinese President Xi Jinping and Russian President Putin on February 4 of last year was followed by Russia’s invasion of Ukraine that same month.
Fu Cong, the Chinese embassy to the European Union, just asserted that” no control” was more rhetoric than reality after Russia experienced losses on the battle with no end in sight.
2 Power of Siberia
Those bilateral limitations are also seen in the stalled 2 Power of Siberia pipeline project. In July last year, Mongolian Prime Minister Oyun-Erdene Luvsannamsrai said the pipeline’s feasibility study had been completed and that construction would begin in 2024. The pipeline is scheduled for completion in 2028.
Nevertheless, as of right now, China has resisted giving the job its final go-ahead while it is still engaged in talks with Russia about gas prices. & nbsp,
” Russia has less trust the more urgently it wants to close the deal.” We should maintain our composure and waited, a poet from Henan writes in an essay that was released in August. & nbsp,
According to him,” Due to the Polish situation, European nations reduced their reliance on Russian oil and gas, while many nations are afraid to engage in product industry with Russia because of pressure from the US and NATO.” & nbsp,
” China is unique. The Henan-based author opines,” We are the country’s second-largest business and a military authority and are not afraid of the United States’ danger.” ” Until Russia agrees to lower oil prices, we have time and energy to delay.”
” Business advantages should always come first, despite the fact that China and Russia are naturally friends.” Russia performs its own equations as well. For instance, he claims that it sells fuel to China for US$ 80 per barrel while selling it to India for just US$ 35. He asserts that Russia is exploiting China.
According to a journalist in Shanghai, China has geopolitical concerns in addition to price and cost issues. & nbsp,
He claims that it is uncertain whether the gas pipelines will go through Mongolia. Will Mongolia shut down the pipeline if it wants to ship rare earths to the US but China rejects it in the future? & nbsp
Additionally, he claims that China may expand its energy sources rather than relying solely on Russia, which is currently experiencing severe economic unpredictability as a result of the Ukraine war.
Earlier in August, Mongolia and the US signed an” open skies” agreement that could make it easier for rare earth metals to be transported by air to the United States in the future. However, Chinese pundits have claimed that such a program must be approved by China and Russia for landlocked Mongolia. & nbsp,
Read: Unique Earths wall: US-Mongolian Aviation Pact
Read: 2 Power of Siberia to divert Europe-bound gas to China
At & nbsp, @ jeffpao3 is Jeff Pao’s Twitter account.