China has saved a staggering $20 billion since 2022 by increasing its imports of Russian oil over Middle Eastern competitors, according to Igor Sechin, head of Rosneft and responsible for the development of the fuel and energy complex in the country. Now, Russia is the number one oil supplier. However, Middle Eastern partners are unlikely to be upset. How does Beijing support its economy?
Over the past decade, Russia has successfully reoriented its oil exports towards the East, becoming the number one oil supplier to China, holding approximately a 20% share, stated Igor Sechin, secretary of the commission under the President of the Russian Federation on the strategy for developing the fuel and energy complex.
Sechin mentioned that the cumulative economic effect for China since 2022, due to more efficient procurement of Russian oil compared to Middle Eastern alternatives, stands at around $20 billion. He made these remarks at the Russian-Chinese Energy Business Forum.
Therefore, after 2022, Beijing has made its oil imports more economically efficient, contrasting with the European Union, which has reduced the efficiency of its imports. This is a significant competitive advantage for the Chinese economy as a whole, and particularly in comparison with the competing European economy.
A similar situation is observed in the energy sector. For industries in Russia and China, electricity costs more than twice as low as in the USA and three to four times lower than in several EU countries, noted Sechin. This is a fundamental factor for the competitiveness of the economies of both countries. The reason lies in China's less abrupt rejection of coal compared to the EU while actively developing renewable energy. Beijing understands that to phase out something old, it first needs to create something new to replace it.
The cooperation between Russia and China is also actively developing in the gas sector. Russia accounts for more than 20% of China's gas import market, making it one of China's key partners in ensuring energy security. Sechin pointed out that one-fifth of the gas imported by China comes from Russia. China aims to make gas supplies more efficient, which is why it started purchasing sanctioned Russian LNG this year. According to unofficial information, discounts on this gas reach 20-30%, meaning Beijing stands to gain significantly and make this one of its competitive advantages on the global economic stage.
An interesting calculation of China's economic benefit from purchasing Russian oil since 2022 raises some questions. It possibly relates to the price difference between the Russian Ural grade and North Sea Brent. Russian sanctioned oil is cheaper for China, hence the savings are formed. “Throughout 2024 and a significant part of 2025, the price difference between Urals and Brent was about $12-13 per barrel. This difference in prices may have been taken alongside the volume of oil delivered to China by sea, thus calculating the savings. The discount on oil sent from Russia to China via pipelines is much less – about a couple of dollars. Therefore, it mostly concerns Urals oil delivered by sea,” elaborated Igor Yushkov, an expert at the Financial University under the Government of the Russian Federation and the National Energy Security Fund.
“Before 2022, China was already the largest buyer of Russian oil when considering statistics by individual countries. However, collectively, EU countries purchased more than China alone. After 2022, the PRC significantly increased its intake of our oil compared to before. Earlier, it mainly comprised VSTO and Sakhalin grades of oil transported through pipelines via Kazakhstan and VSTO to the port; post-2022, volumes of Urals oil supplied by sea from western ports – Novorossiysk and ports in the Leningrad region – grew,” noted Yushkov.
Russia has displaced mainly Middle Eastern suppliers – Saudi Arabia, Iraq, and African producers – on the Chinese market. They have dropped to lower positions in the supplier rankings, ceding the palm to Russian supplies, he said. The same situation has occurred in the Indian market. However, it's unlikely that Middle Eastern partners are upset with Russia, as they have gained the European market and continue to earn as before, believes Yushkov.
“Russian oil exports to China increased from 12.8 million tons in 2005 to 108.5 million tons in 2024, while Russia's share in the structure of Chinese imports rose from 10% to 20% respectively.
For comparison, the share of Saudi Arabia, the second-largest importer, was 14% last year, and Malaysia's share was 13%,” notes Sergey Tereshkin, CEO of Open Oil Market.
He adds that as recently as 2021, Malaysia's share in Chinese oil imports was only 4%, but by 2024 it reached 13%. This surge hides shipments of sanctioned Iranian oil. “Supplies from Malaysia consist of more than two-thirds of Iranian oil, which reaches the Chinese market transiting through Malaysian ports. This increase in share was associated with the easing of sanction monitoring that occurred in 2022 due to the Biden administration's desire to smooth price fluctuations in oil,” explains Tereshkin.
“After 2022, China started purchasing even more sanctioned oil. It had already been sourcing Iranian and Venezuelan oil, which are under sanctions, and then increased its purchases of sanctioned Russian oil. As a result, the share of so-called discounted oil significantly rose in China's fuel balance,” says Igor Yushkov.
Russian oil is cheaper for China, and that is its main efficiency.
“The average price of oil supplies from Russia to China in 2024 was $574 per ton, while from Saudi Arabia it was $609 per ton. In 2021, Russian oil was, conversely, the most expensive:
$509 per ton against $502 per ton for Saudi oil and $479 per ton for Malaysian oil (essentially Iranian),” Tereshkin points out. Notably, Iranian oil transiting through Malaysia to China is even cheaper than sanctioned Russian oil.
Concurrently, Russia and China have expressed their readiness to expand cooperation. Chairman Xi Jinping emphasized that China is ready to collaborate with Russia to continuously strengthen their comprehensive energy partnership.
According to Sechin, by the next five years – by 2030 – China aims to increase oil imports by another 1.4 million barrels per day, as predicted by global analytical agencies. The growth points for global oil consumption are located specifically in the Asia-Pacific region, particularly in China, he noted.
Regarding the gas market, redirecting the volumes lost in Europe to China was not successful, as infrastructure needs to be built for that, which requires signing a long-term contract first, says Yushkov. Therefore, Russia had to cut gas production.
The increase in gas supplies through the “Power of Siberia – 1” is still a planned growth within the contract signed long before 2022 – in the spring of 2014. Now in terms of expanding gas cooperation, discussions could be about signing an agreement on gas supplies through the “Power of Siberia – 2,” as well as increasing LNG supplies to China. Additionally, Beijing has started purchasing sanctioned LNG from the Arctic LNG-2 project this year, with unofficial discounts potentially reaching 20-30%. This could also provide significant savings for Beijing.
Source: VZGLYAD
