Oil and Gas Industry. New Opportunities in Upstream, Midstream, and Downstream
KEY CONCLUSIONS
The energy sector is a mutually beneficial and promising area of cooperation for Russia and China
“Russian-Chinese cooperation in the energy sector is of strategic interest to both parties. This cooperation is very promising,” Rair Simonyan, Advisor to the Chairman of the Management Board, Inter RAO.
“We have achieved good results when cooperating with Russia. In 2018, the volume of our investment in Russia reached USD 5 billion,” Yang Huaiyi, General Representative of Sinopec Group in Russia.
The key to effective cooperation is close relations between the leaders of both countries
“Russia and China’s cooperation in the oil and gas sector is led by the heads of our two countries. Our government bodies and agencies meet frequently, and work together on solving difficulties and problems,” Hou Qijun, Deputy General Manager, CNPC.
“Our leaders Xi Jinping and Vladimir Putin decided together that we must continue to improve cooperation between our countries and achieve new levels of political partnership, so we also hope to strengthen our traditional friendship,” Sun Dalu, Assistant President, CNOOC.
A large number of major joint projects have been launched in the oil and gas sector
“Yamal LNG is a very successful project, starting from production, logistics, all the way to future prospects,” Hou Qijun, Deputy General Manager, CNPC.
“On 1 December 2019, China will start receiving its first gas deliveries via the Power of Siberia gas pipeline. It will be a historic occasion,” Dmitry Khandoga, Deputy Head of External Economic Affairs Department, Gazprom.
“This year, our goal with our Chinese partners was to finalize all necessary agreements regarding product sales and the construction of a [gas chemical – Ed.] factory,” Vadim Medvedev, Vice President, ESN Group.
“We plan to grow our cooperation with Russia to participate in more LNG projects. We also hope to cooperate with regards to oil and gas, coal, etc.,” Zhang Kaiyong, General Director, Shaanxi Yanchang Petroleum Group.
Active sector cooperation is strengthened by the One Belt, One Road initiative
“As new trends and changes develop in the global energy sector and international aviation industry, CNAF continues to develop, accelerating the integration of the One Belt, One Road initiative and developing broad international cooperation,” Xi Zhengping, Director and General Manager, CNAF.
“We actively participate in the One Belt, One Route initiative investment programme and hope to see productive future cooperation,” Huang Xudong, Vice General Manager, Hengli.
“Our joint project [a large LNG terminal – Ed.] is in complete agreement with the One Belt, One Route initiative and the development of the Eurasian Economic Union. The shipments will help reduce the deficit of resources in China,” Igor Berezin, General Director, Avestra Group.
PROBLEMS
Bureaucratization slows business development
“The limiting factor is the level of bureaucratization when doing business in Russia,” Eric Maurice Liron, First Vice President, Rosneft.
Russia’s need to replace hydrocarbon reserves
“Certain factors may become crucial to the development of relations between Russia and China. One of these factors is the need to replace reserves. We've hit a high level of oil and gas production, and if we’re talking about the hydrocarbon reserve replacement ratio, we’re looking at a value of 1 across the country, sometimes even less. This is a major issue that oil, gas, and geology companies must focus on to replenish reserves,” Sergey Gorkov, General Director, Chairman of the Management Board, Rosgeologia.
Intercultural differences
“China and Russia, when we first started cooperating, we had language, cultural, and communication problems,” Yang Huaiyi, General Representative of Sinopec Group in Russia.
SOLUTIONS
Joint development of hard-to-recover and unconventional hydrocarbon reserves
“I'd like to bring your attention to the potential for cooperation with Russia when it comes to the development of unconventional reserves with the participation of Chinese companies. Data shows that the volume of potentially recoverable oil reserves in Russia may be as large as 500 billion barrels, which is far greater than the potential of not just the United States, but also Iraq, Iran, and Saudi Arabia,” Eric Maurice Liron, First Vice President, Rosneft.
Developing transport and logistics infrastructure for new projects
“One of the conditions for the start of deliveries [of liquefied natural gas – Ed.] is solving the issue of transport. We think it's vital that Russian Railways is tasked with preparing and signing a cooperation agreement with China Railway regarding the implementation of transport solutions for the project,” Igor Berezin, General Director, Avestra Group.
Implementing new technologies
“A few years ago, we and our partners started developing a project called ‘Joint Russian-Chinese laboratory for the development of high-tech equipment and software’ for directional drilling of oil and gas wells. In accordance with our 2016 agreement to create this laboratory, China has already developed, produced, and tested the laboratory equipment, and connected it with Russian equipment,” Konstantin Stanislavchik, Director General (CEO), Neftegazavtomatika.
“We need to develop digital technologies. This brings with it certain risks, but a digital economy is the key to future development,” Li Changyue, Chairman of the Board of Directors, YDF Valves.
Tax support for offshore projects
“On a separate note, I’d like to point to the taxation system for offshore projects. In the interest of stimulating offshore development and production, the Russian government has set very generous tax and customs regimes. From the point of view of tax preferences for offshore drilling, the Russian shelf is lower than the global average when it comes to tax burden,” Sergey Matrosov, Head of Business Development and External Relations, Gazpromneft Shelf.
For more information, visit the Roscongress Foundation's Information and Analytical System at roscongress.org/en.
