Sanctions for Russia, as the Chinese Sinopec is moving
For the Chinese giant Sinopec, the war in Ukraine represents a serious problem in light of the active partnerships with the Russian energy producers Rosneft, Sibur (of which Sinopec controls 10% of the shares) and Novatek, all of which have ended up in the Western crosshairs.
How is China regulating itself with the sanctions imposed by the West on Russia and in particular with the embargo on oil and gas by Russian companies?
Scrolling through the news, one sees the embarrassment of the Chinese leadership in disentangling two priorities: on the one hand not to give the West the impression of wanting to blatantly boycott the sanctions on Russia and, on the other, to continue to pursue the policy of recent years supplying new energy resources for an economy that desperately needs them.
On the second front, the numbers speak for themselves and testify to Beijing's intrinsic difficulties in joining the Western campaign: Russia is now China's second oil supplier and the third in gas. Breaking bridges in these circumstances is unimaginable.
It must also be for this reason, it is easy to assume, that, in addition to refusing to condemn the invasion of Ukraine and even to call it by its name, China has repeatedly raised its voice against the sanctions – defined as unilateral and illegal by Guo Shuqing , powerful chairman of the Regulatory Commission on Banking and Insurance.
The official position of Beijing, as reiterated by Guo, is that the country would have maintained normal commercial and economic relations with Russia.
DOES SINOPEC SUSPEND OPERATIONS IN RUSSIA?
However, recent exclusive revelations from Reuters would seem to signal Beijing's apparent bow to the strategy of the West.
According to two sources aware of the situation, at the beginning of March the Foreign Ministry would have convened the leaders of Sinopec, China National Petroleum and China National Offshore Oil to ascertain what kind of economic relations the three energy giants had with Russia . The Ministry would therefore have urged the three companies not to enter into new agreements with Russian entities in such a delicate phase.
The message launched by the Dicastery would immediately produce its effects, aligning the commercial policies of the three companies with that of the government. As an executive of a state oil company commented to Reuters , those working in the energy sector in China currently have no choice but to "strictly follow Beijing's foreign policy … There is no room for maneuver for companies. to take the lead in terms of new investments ".
Reuters also reports that the three Chinese public companies have set up targeted task forces on Russia with the task of studying emergency plans regarding both possible supply crises, and to understand precisely the effect of secondary sanctions launched by countries such as the USA.
THREE SINOPEC PROJECTS IN RUSSIA AT RISK
For Sinopec, the war in Ukraine represents a serious problem in light of the active partnerships with Russian energy producers Rosneft, Sibur (of which Sinopec controls 10% of the shares) and Novatek, all of which have ended up in the Western crosshairs.
The Taihu project for the joint exploitation of a gas field in the Volga-Urals basin in western Russia is underway with Rosneft.
Together with Sibur, however, Sinopec was building the Amur chemical gas plant in eastern Siberia: a $ 10 billion project that is expected to become operational in 2024.
Finally, a joint venture has been active with Novatek since 2019, with Gazprombank and Sberbank among its best-known financiers, with the aim of distributing natural gas in China.
STOP TO AMUR?
According to Reuters sources, on Amur, Sinopec eventually imposed a pause for two reasons.
The first reason concerns the embarrassing presence of Putin's iron ally Gennady Timchenko – promptly finished in the list of persons sanctioned by the EU and Great Britain – on Sibur's board as well as among its shareholders.
The second key factor is the presence, among the most important financing banks of Amur, of Sberbank, on whose operations the impact of Western sanctions now weighs (the institute, however, denies the existence of any problem and claims to continue working in synergy with Sinopec on the project).
STOP THE JOINT-VENTURE WITH NOVATEK?
Also in this case, Sinopec would have been forced to rethink due to two obstacles: the involvement of Sberbank and, again, the presence on the board of Novatek of Timchenko (who, moreover, promptly resigned).
BEHIND? THE DOUBLE ANNOUNCEMENT BY THE PRESIDENT OF SINOPEC
As Asia Nikkei reported, President Yu Baocai took advantage Monday of the presentation of the annual business results to make two announcements in total contrast to the revelations of Reuters : the projects in partnership with Russian entities will proceed smoothly, and the company will continue, as in the past, to import both Russian oil and gas in the name of the sacrosanct objective of “diversifying sources of supply” and of key considerations such as price, supply stability and transport costs.
"We will continue to do so in the future", explained the president regarding the purchases of oil and gas, "in accordance with commercial principles and with the rules of international trade, in order to develop normal cooperation".
Regarding Sinopec's projects in Russia, Yu specified that, both in the case of Amur and in that of Taihu, they are "generally operating stably … and there are no indications of deterioration".
Asia Nikkei also gathered the testimony of Sun Lili, the president of the subsidiary Sinopec Engineering Group, who reported that its four engineering units active in the Amur complex continue to work in "relatively stable" conditions. With some optimism, Sun added that in her opinion the country risk in Russia is "generally under control".
THE CHINESE AMBIGUITY
It is not clear at this point whether Beijing has decided to openly challenge Biden's US and all Western partners who have joined the hard line against Moscow, or whether the conflicting news is the result of the uncertainty and dilemmas that are gripping China in this regard. moment.
Washington, aware of the importance of Chinese collaboration in the effort to isolate Russia, has just opened up to the Dragon by removing a significant part of the duties imposed on its goods by the Trump administration.
It therefore remains to be seen whether Beijing intends to bite this outstretched hand or squeeze it.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/primo-piano/sanzioni-alla-russia-come-si-sta-muovendo-la-cinese-sinopec/ on Thu, 31 Mar 2022 06:41:50 +0000.