Saturday, March 28, 2009

Positioning your energy in the global market - Russia to supply more oil to China

The two will find strength in working with one another.

Russian Deputy Prime Minister Alexander Zhukov told reporters in China that "Russia is fully capable of becoming the biggest energy supplier for China in the upcoming 15 years."

Zhukov made the remarks at the annual China-Russia Investment Forum and stressed the two nations should work together in many areas, but that energy cooperation was especially important and should be expanded.

The financial crisis has definitely affected the two nations. Russia being especially hard hit because of declining oil revenues and China because of plummeting demand for exports.

Nevertheless, the two BRIC countries have managed to a strengthen their level of economic and trade cooperation. Last month, China agreed to loan Russia $25 billion in exchange for 300 million tonnes of oil through pipelines to China from 2011 to 2030.

A new pipeline is already well into the planning stages from Russia's Skovorodino in its far-eastern Amur region to China's northeastern city of Daqing.

In 2008, China ranked as Russia's second largest trading partner behind the European Union. On the flip side, Russia came in as China's 9th largest trading partner, down 2 spots from 7th in 2007.

Volatile markets, record high commodity prices followed by record drops in prices mixed with separate agendas in both countries may have hindered the growth of bilateral cooperation in the past.

With two very different economies and complementary attributes, Sino-Russian Cooperation will continue to grow. Russia has the fuel and resources which China need to develop. China has the cheap manufactured goods Russian's are learning to love. More importantly, China also has the cash Russia needs to finance it's growth.

The two will find strength in working with one another.