Research On Russia 's International Competitiveness Of China' S Energy Export

In the coming decade, Asia will become a major market for gas and oil, led by China. Securing stable and affordable imports will be essential to plans to reduce carbon intensity in China, and potentially to fill the needs of country in security and economic development. China has quickly risen to the top ranks in global energy demand over the past few years and became the largest global energy consumer in 2011 and is the world’s second-largest oil consumer behind the United States.The prime position of the Russian Federation in global oil and gas markets can hardly be overestimated. Russia was the world’s largest producer of crude oil including lease condensate and the second-largest producer of petroleum and other liquids after Saudi Arabia in 2014, with average liquids production of 10.9 million barrels per day (b/d). Russian is the second-largest to the United States producer of natural gas in 2014, producing 22.1 trillion cubic feet (Tcf).Europe has traditionally consumed the bulk of Russian oil and gas exports. However, the Russian oil and gas industries are increasingly shifting its attention from Europe towards Asia because of the latter region’s growing energy demand and rapidly increasing import dependency. Besides, due to Western sanctions set up against Russia during the Ukraine crisis, Russia is more likely to re-route increasing volumes of oil and gas to Asia, particularly China will become its pivot market.Meanwhile, global energy markets are fundamentally changing. The surge in light, tight oil production in the US has significantly reduced US imports, freeing up millions of barrels of oil from West Africa and the Middle East. The US shale revolution, together with weak oil demand in Europe; appearance of cheap LNG exports; drop of oil prices, are responsible for abundance of energy suppliers in the market. These dynamics have repercussions for Russia, as energy export competition towards China is intensifying. OPEC member states are trying to undercut the competitiveness of Russia feeding into Asia. Countries such as Saudi Arabia and UAE are competing with Russia in oil exports. There is invisible competition between Russia and US, as LNG promoter, also between Russia and Central Asian Republics in gas exports. In this situation, the international arena is fulfilled with a considerable number of countries, which are eyeing for Chinese energy market export dominance. The target, which has been put in this paper work, is to prove that even on such a competitive background Russian and Chinese energy cooperation looks more successful than with other suppliers. There is a number of factors which motivated China to clinch the biggest energy deals with Russia.The thesis comprises the information about the distinctive complementary reasons for energy cooperation between Russia and China. The study shows that except reliable political and long-term trusted economic relations, these two countries have strong energy mutual benefits, which are laying in their factor endowments. But the supremacy of Russia on Chinese energy market in comparison with other energy suppliers is defined by next several factors: geographical position, cost advantages, equipment and technology advantages. Besides, for China, any further delay of the economic development of the three north-eastern provinces, through which the Russian gas pipelines are passing, was not acceptable as the wealth gap between the coastal provinces and interior provinces, after three decades of the Open Door policy, continues to widen. Furthermore, the deterioration in air quality reminded the Chinese policy makers of the necessity of reducing China’s heavy dependence on coal, and consequently the expansion of gas use from Russia, which is agreed at competitive price for Russia. It is hoped that pipeline network construction in China’s industrial zones in its north-eastern provinces-to enable gas imports from Russia’s East Siberia-could serve a similar role to the part played by the construction of the West-East pipeline (WEP) corridor in the economic development of western China, the construction of Altai gas pipeline. What’s more, as the world’s largest energy importer, China has been very conscious of the vulnerabilities resulting from its growing dependency on seaborne oil and gas supplies, maximization of onshore pipeline-based oil and gas supply has thus become a top priority to ensure the security of energy supply from Russia.