Russia’s plans for Arctic gas may be an alternate source for China’s energy needs, sate Chinese appetite for US energy products
- Russia’s agreement with Chinese state-owned oil firms to develop natural gas in the Arctic Circle could provide an alternative channel for China’s energy needs
- Meanwhile, US-China trade war acts as a brake on potential investments by Chinese energy majors in some US projects
The United States, the largest potential new supply of natural gas on earth, may have to contend with a formidable competitor in the Arctic Circle, after Russia’s second-biggest producer Novatek’s agreement last week to sell 20 per cent of its Yamal Peninsula project to Chinese state oil companies.
The deals with CNOOC and China National Petroleum Corp – the parent of listed PetroChina – were announced at last week’s Belt and Road Initiative forum in Beijing. They are pending due diligence and no investment amount has been disclosed.
However, their announcement came at a time when the US-China trade dispute has already delayed potential investments by Chinese energy majors in some US projects.
“There is another tier of US projects which need some Chinese investment and or gas purchase commitment to keep going,” Nicholas Browne, Singapore-based Asia gas and liquefied natural gas director at natural resources consultancy Wood Mackenzie. “Until the trade dispute is cleared up, it will be challenging to make a business case for some of these projects.”
The binding investment commitment in Novatek’s Arctic LNG 2 project by CNOOC and CNPC gave a “vote of confidence” in Russian LNG, particularly in Novatek’s ability to deliver projects, he noted.
