China hesitant to grow too dependent on Russian gas

(Bloomberg; July 2) -China is wary of expanding energy investments in Russia because closer ties with the Kremlin could harm its relations with the United States, according to a former researcher at China’s biggest offshore explorer. The Beijing government isn’t prepared to jeopardize its U.S. economic links, said Chen Wei Dong, who resigned as chief researcher for China National Offshore Oil Corp.’s Energy Economics Institute in May. The U.S. is viewed as a global partner while Russian ties are regional, he said.

Russia is turning to Asian markets after its annexation of Crimea led the U.S. and Europe to impose sanctions, including oil and banking restrictions. “If Russia has bad relations with the U.S., this may make it more difficult for China to build better relationships with Russia,” Chen said in an interview in Moscow last week. “China is looking for a balance.” The East Asian nation needs to safeguard its relationship with the U.S. because, while the two don’t trade oil or gas, they are key economic partners.

Gazprom already supplies liquefied natural gas to China, and Russia struck a deal last year to pipe gas to China through a new Siberian link and is pushing for a second contract. Yet China may take a cautious stance, having seen gas supply to Europe disrupted during pricing disputes between Gazprom and Ukraine. “People say: We can import gas from Russia but we have to keep it at a certain level, 15 percent, maximum 20 percent,” Chen said. “Otherwise we will become too insecure, too dependent.”