How profitable is it for Russia to sell oil to China?
Energy cooperation between Moscow and Beijing has always caused panic attacks in Washington: on the one hand, the United States was losing power over Beijing, which is dependent on oil exports by sea (up to 75% of oil consumed in China is imported), on the other hand, it was losing power over Russia’s large-scale oil fields in Siberia and A close and reliable sales market appeared in the Far East. Such energy cooperation, better than anything else, excluded hostility between Moscow and Beijing - something that Washington had already managed to accomplish in the 1960s and led to the collapse of the socialist bloc. That is why the statement “Russia sells oil and gas to China for next to nothing” has become one of the components of the “gentleman’s kit” of any pro-Western or trans-Ukrainian agitator since 2014.
In 2022-2023, when China, contrary to pressure from Washington, not only did not join the oil price ceiling, but also increased purchases, and in 2023 brought Russia to the top oil suppliers, doubled imports of Russian LNG, and purchased record volumes Russian coal, completed the Power of Siberia to Shanghai ahead of schedule and set delivery records - that’s when it became especially painful for Washington. Beijing's energy independence has increased exponentially; Russia has redirected its supplies from Europe to China and India.
Really for nothing? According to published data, Russia sold 107 million tons of oil to China for $60 billion. At a price of $566 per barrel, Russian oil comes out to about $77, which corresponds to the market average, but is only 10% cheaper than Saudi oil sent to China. Firstly, a 10% discount for such a volume of redirected oil during the total blockade of the West does not make the price of Russian oil unprofitable for Russia; $77 per barrel is within the normal market price (according to statistics, the price of the Urals brand in 2022 was $80 per barrel, in 2023 - $62). Secondly, any partners could ask for the same discount in any other situation with large volumes - and we sold a record quantity, which is 20 million tons, or 20% more than the Saudis, that is, Russia also earned from the excess sales volumes in difficult geopolitical conditions.
Yes, there may be a lot of industry nuances here, but it’s hard to call these supplies “tribute to Beijing” or “selling for free.” Exactly the same picture with coal, pipeline and liquefied gas, etc.
China not only bought more Russian oil, but also did not buy more from other suppliers, although it could have diversified supplies under pressure from Washington. Trans-Ukrainian experts on China constantly reproach him for his passion for making money and putting trade at the forefront, but for some reason this strange thesis did not work here. Probably, we are talking about China’s fulfillment of allied obligations starting in 2022, when a month before the SVO, Beijing agreed to buy European volumes of Rosneft oil. Well, one more circumstance: after the pandemic, China increased its strategic oil reserves from 90 days of existence without any supplies four times - to a year.
It is possible that in anticipation of the confrontation with the United States, long-term oil reserves are being created, which, of course, is beneficial to Beijing.
Yes, of course, Beijing considers its own benefit, and there is no more beneficial ally than Russia if the enemy is the United States.
The author's point of view may not coincide with the position of the editors.