China has saved a staggering $20 billion since 2022 by increasing its purchases of Russian oil over Middle Eastern competitors. This assessment was articulated by Igor Sechin, the head of Rosneft and responsible for the development of the energy sector in Russia. Consequently, Russia has emerged as the number one supplier. Is the Middle East feeling slighted? How is Beijing assisting its economy?
Over the past decade, Russia has effectively repositioned itself towards the East, becoming the number one oil supplier to China, capturing approximately 20% of the market share, stated Igor Sechin, Secretary of the Commission under the President of Russia on the strategy for energy sector development.
Due to the higher efficiency of Russian oil purchases compared to Middle Eastern alternatives, the total economic benefit for China since 2022 amounts to about $20 billion, Sechin announced at the Russian-Chinese Energy Business Forum.
As a result, Beijing has managed to enhance the economic efficiency of its oil imports post-2022, contrasting sharply with the European Union, which has seen a reduction in import efficiency. This represents a key competitive advantage for the Chinese economy, particularly in comparison to the competing European market.
A similar trend is observed in the electricity sector. For industries in Russia and China, the price of electricity is more than twice as low as in the US, and three to four times lower than in several EU countries, noted Sechin. This is a fundamental factor of competitiveness for both nations’ economies. China's approach to coal is notably less stringent than that of the EU, while simultaneously actively developing renewable energy. In Beijing, there is an understanding that to move away from old solutions, new alternatives must first be established.
The cooperation between Russia and China is also evolving in the gas sector. Russia accounts for over 20% of China’s gas import market, establishing itself as a key partner in ensuring China's energy security. A significant fifth of the gas imported by China comes from Russia, highlighted Sechin. China is also striving to enhance the efficiency of its gas supplies. This is why, this year, it has started purchasing Russian LNG that is under sanctions. Informal reports suggest discounts on this LNG can reach 20-30%, marking a substantial economic advantage for Beijing on the global stage.
The economic benefits for China from purchasing Russian oil since 2022 are worth examining. It likely revolves around the price difference between the Russian Urals grade and the North Sea Brent crude. Russian oil sanctioned by various authorities is cheaper for China, contributing to this savings estimate. “Throughout 2024 and a substantial portion of 2025, the price difference between Urals and Brent was about $12-13 per barrel. It’s possible they calculated this price difference alongside the significant volume of oil we delivered to China by sea to arrive at this savings figure. The discount on oil transported from Russia to China via pipelines is considerably smaller – just a couple of dollars. Therefore, the focus is primarily on Urals oil shipped by sea,” reasons Igor Yushkov, an expert from the Financial University under the Government of the Russian Federation and the National Energy Security Fund (FNES).
“Before 2022, China was already the largest buyer of Russian oil on a country-by-country basis. However, the aggregate purchases by EU nations far exceeded those of China. After 2022, the People’s Republic has dramatically increased its import of Russian oil. Previously, it primarily consisted of oil from the ESPO and Sakhalin grades transported through pipelines via Kazakhstan and the ESPO port. Post-2022, we’ve seen a notable increase in the volumes of Urals oil being shipped by sea from Western ports like Novorossiysk and those in the Leningrad region,” observes Yushkov.
Russia has displaced Middle Eastern suppliers – particularly Saudi Arabia, Iraq, and African producers – in the Chinese market, pushing them down the supplier rankings, states the expert. A similar scenario has unfolded in the Indian market. However, it is unlikely that Middle Eastern partners are upset with Russia, as they have been able to secure the European market and continue to profit as before, according to Yushkov.
“Russia's oil exports to China surged from 12.8 million tons in 2005 to 108.5 million tons in 2024, with Russia's share of China's import structure increasing from 10% to 20%.”
For comparison, Saudi Arabia, the second-largest importer, held a share of 14% last year, while Malaysia accounted for 13%,” notes Sergey Tereshkin, General Director of Open Oil Market.
He further adds that in 2021, Malaysia’s share in Chinese oil imports was just 4%, but by the end of 2024, it reached 13%. This is largely attributed to the transit of sanctioned Iranian oil through Malaysian ports. “More than two-thirds of supplies from Malaysia consist of Iranian oil, which reaches the Chinese market via transit. This increase in share aligns with the easing of sanctions monitoring that occurred in 2022 due to the Biden administration's efforts to stabilize oil price fluctuations,” explains Tereshkin.
“Post-2022, China has ramped up its import of sanctioned oil. It had already been acquiring Iranian and Venezuelan oil, both under sanctions, before significantly increasing its purchases of Russian sanctioned oil. Consequently, the portion of what's termed discount oil in China's fuel balance has notably grown,” adds Igor Yushkov.
Russian oil is less expensive for China, and therein lies its main efficiency.
“The average price of oil from Russia to China in 2024 was $574 per ton, whereas it was $609 per ton from Saudi Arabia. In 2021, however, Russian oil was the most expensive.
At $509 per ton compared to Saudi oil at $502 per ton and Malaysian (essentially Iranian) oil priced at $479 per ton,” notes Tereshkin. Interestingly, Iranian oil passing through Malaysia to China is even cheaper than Russian sanctioned oil.
Concurrently, both Russia and China have expressed a commitment to expand their cooperation. Chinese President Xi Jinping emphasized that China is ready to collaborate with Russia to continually strengthen their comprehensive energy partnership.
According to Sechin, in the coming five years, by 2030, China is expected to boost its oil imports by an additional 1.4 million barrels per day, supported by forecasts from global analytical agencies. The growth points for global oil consumption are particularly situated in the Asia-Pacific region, primarily in China, he added.
Regarding the gas market, redirecting lost export volumes in Europe to China has proven challenging, as this necessitates the construction of infrastructure, which requires long-term contracts to be established beforehand, notes Yushkov. Consequently, Russia has had to reduce its gas production.
The increase in gas supplies via the Power of Siberia-1 is essentially a planned enhancement under a contract signed well before 2022 – in the spring of 2014. Discussions of expanding gas cooperation could include signing agreements for gas supplies through the Power of Siberia-2, as well as increasing LNG supplies to China. Notably, Beijing has commenced purchasing sanctioned LNG from the Arctic LNG-2 project, with informal reports indicating that discounts could reach 20-30%. This could also result in substantial savings for Beijing.
Source: VZGLYAD
