We use cookies to give you the best possible experience on our website. By continuing to browse this site or by choosing to close this message, you give consent for cookies to be used. For more details please read our Cookie Policy.

Russia news roundup

In the Russian oil and gas industry, the latest news sees the nation moving further and further away from its traditional trade partners. For a while, Russia has been relying less on Europe for hydrocarbon exports, choosing instead to focus on emerging markets elsewhere in Asia.

China in particular has been a major importer of Russian oil and gas. Russia recently overtook Saudi Arabia as the number one exporter of oil to China, and it is looking to solidify this trade relationship with new oil and gas pipelines.

Other Asian nations are also set to benefit from an injection of Russian capital. Pakistan could receive up to $2 billion to build a pipeline, while Russia has also indicated it would be open to working with Iran as long as the sanctions on Tehran are lifted. Here are the main stories about the changing face of Russian oil and gas:

Rosneft sees rising profits in Q1 2015

Russia's leading oil firm and the largest publicly traded petroleum company in the world Rosneft has just announced its results for the first quarter (Q1) of 2015. Despite dealing with a number of adversities, including a drop in oil prices that saw the cost per barrel fall by around eight per cent, the company saw profits increase year on year.

In Q1 2014, the company saw net profits of 43 billion rubles (around $771 million). In Q1 2015, this had risen to 56 billion rubles, which is an increase of 30.2 per cent. This is thanks to increases in hydrocarbon production and crude oil sales, both of which rose by 2.1 per cent, as well as a 10.3 per cent boost in gas sales.

Russia and Pakistan to sign deal for $2bn pipeline?

Shahid Khaqan Abbasi, Pakistan's petroleum minister, has indicated that his country is looking to team up with Russia on a major liquefied natural gas (LNG) pipeline project. This would see Russia financing and constructing around 1,100 km of pipeline in Pakistan. In addition to this agreement, Russia will be exporting LNG to Pakistan from 2016 onwards.

According to Mr Abbasi, Pakistan is "trying to sign an LNG pipeline accord with Russia in a government-to-government arrangement during the visit of prime minister [Nawaz Sharif] to Moscow". This would involve Russia contributing around $2 billion to the pipeline, on the condition that the contract would be awarded to the nation without the need for a bidding process. The pipeline will travel from Karachi to Lahore.

Construction begins on China-Russia East-Route pipeline

With China's growing energy needs and Russia's desire to find new markets for its natural resources, it is no surprise that the two nations have been increasingly working together over the last year. Among the most recent news is that work has begun on the Chinese section of the China-Russia East-Route Natural Gas Pipeline, which will travel from Siberia to Shanghai.

The Chinese section will run north from Shanghai and eventually meet with the Russian pipeline in the province of Heilongjiang. Overall, it will be 3,968 km long. Once it has been completed in 2018, Russia's state gas company Gazprom has agreed to a 30-year deal to transport gas to China at an annual rate of 38 billion cubic metres.

A western pipeline is also being planned, although details on this have not yet been agreed. Once this has been constructed, Gazprom's plans are to increase the amount of gas supplied to China to 70 billion cubic metres per year.

Gazprom hints at involvement in Iranian LNG projects

Alexander Medvedev, chief executive of Gazprom, has hinted that the company might take part in Iran's LNG projects, saying: "Gazprom does not rule out its participation in these projects under certain conditions." However, he has made it clear that this would not happen until sanctions on the Middle Eastern nation were lifted.

Second pipeline link to Chinese refineries planned

Russia is currently the main supplier of oil to China. However, it is now looking to solidify this position with a new deal that will see the construction of a second pipeline linking directly to China's main refineries.

The planned pipeline is estimated to be 955 km long, and will transport crude from Mohe to Daqing. Once completed, it will have a capacity of roughly 15 million tons of Russian crude oil a year. This is part of a general strategy in Russia's oil and gas sector to focus more on markets in south-east Asia.

A report from BMI Research stated: "The promise of greater access to China's large, growing domestic market has proven very attractive to Russian suppliers, who have accelerated their Asian pivot."

Related Events

Get in Touch

Want news like this in your inbox?