Russia Monitor is a review of the most important events related to Russian internal and external security, as well as its foreign policies.
Date: 28 March 2022 Author: Grzegorz Kuczyński
China’s Sinopec Pauses Russian High-Risk Energy Project
Beijing has refused to condemn Moscow’s actions in Ukraine. Perhaps the same will apply for the arms industry. However, joint business projects are now at risk. Beijing is afraid of Western sanctions.
China’s state-run Sinopec Group has suspended talks for a half-million-dollar petrochemical investment and gas marketing venture in Russia. According to sources in Reuters, this was requested by the Chinese authorities, wary of sanctions against China. The plan has been to team up with Sibur, Russia’s largest petrochemical producer, for a project similar to the Amur Gas Chemical Complex in East Siberia, 40 percent owned by Sinopec and 60 percent by Sibur, set to come online in 2024. The construction of the Amur Gas Chemical Complex started in August 2020. It was 35 percent ready by February 2022. The project is set to come online in 2024–2025. Sinopec hit pause after realizing that Sibur minority shareholder and board member Gennady Timchenko had been sanctioned by the West. The Amur project itself faces funding snags as sanctions threaten to ban financing from key lenders, including Russia’s state-controlled Sberbank. Beijing does not want Western sanctions to slap Chinese companies. China’s state-run energy businesses––Sinopec, China National Petroleum Corp (CNPC), and China National Offshore Oil Corp (CNOOC)––have set up task forces on Russia-related matters and are working on contingency plans for business disruptions and in case of secondary sanctions. Since 2019, CNPC and CNOOC each have had a 10 percent stake in Novatek’s Arctic LNG-2 and Yamal LNG (since 2014). The Chinese government is yet wary of Chinese companies running afoul of sanctions––it is pressing companies to tread carefully with investments in Russia, its second-largest oil supplier and third-largest gas provider.
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