Advertisement
The View
OpinionComment
Dmitriy Frolovskiy
Dmitriy Frolovskiy

The View | The China factor: why Russia is still betting big on oil

  • At a time when much of the West is planning an exit from fossil fuels, Russia is proceeding with an enormous oil project
  • One key reason is China, which doesn’t see a swift energy transition as a realistic path and could drive global oil demand in the medium term

Reading Time:3 minutes
Why you can trust SCMP
2
Rail wagons for transporting oil stand in sidings at the RN-Tuapsinsky refinery operated by Rosneft in 2020. Rosneft, Russia’s biggest oil company, has started holding meetings with foreign contractors and suppliers for a massive Vostok Oil project. Photo: Bloomberg
Dmitriy Frolovskiy

The pandemic has boosted the global appetite for renewables, yet Russia is focusing on its colossal Vostok Oil project, which promises to be one of the largest fossil fuel production projects in the history of the country, comparable in size with the production in West Siberia in the 1970s.

Advertisement

This month, Rosneft, Russia’s biggest oil company, has started holding meetings with foreign contractors and suppliers for the project, which is valued at up to US$170 billion.

The project is expected to employ hundreds of thousands of workers, create 15 industry towns and build around 800km of new pipeline.

Given the ongoing renewable energy boom and predictions by the likes of BP that global oil demand is unlikely to recover to pre-pandemic levels, a natural question arises: why is Rosneft implementing such an enormous project at a time when much of the West is planning an exit from fossil fuels?

There are a number of explanations, from economic factors to Rosneft’s hopes that the project could yield lower-emission oil – but one of the main variables in the success of a project like Vostok lies in Chinese economic and energy policy. 

03:27

World leaders pledge to cut greenhouse emissions at virtual Earth Day summit

World leaders pledge to cut greenhouse emissions at virtual Earth Day summit
Russia has always relied on its fossil fuel resources: indeed, the wealth and economic stability of contemporary Russia is tied to its status as a petrostate. Today, Russia is the third-largest oil producer, accounting for over 12 per cent of global crude production.
Advertisement