Russia and China signed new oil and gas deals worth an estimated $117.5bn (£86.6bn) in early February 2022, three weeks before Russia's invasion of Ukraine, according to Carbon Brief1. The package included a 30-year gas contract that would boost Russia's gas supply to China by a quarter1.
Gazprom, which signed the deal with a Chinese state-run energy company and holds a monopoly over Russian gas exports, said that once the project reaches full capacity Russia would supply China with 48bn cubic metres of gas per year through a new pipeline and the existing Power of Siberia system1. Reuters reported that the Power of Siberia system is not connected to the pipelines that send gas to Europe1. Reuters described the agreement as "bolstering an energy alliance with Beijing amid Moscow's strained ties with the West over Ukraine and other issues"1.
The deal sits against a wider picture of Russian export flows. Europe receives around 70% of Russia's gas exports and half of its oil exports, according to official US data cited by Carbon Brief, while China takes 5% of its gas exports and 31% of its oil exports1. More than a third of Europe's gas supplies come from Russia, and the UK sources less than 5% of its gas from Russian imports, relying largely on dwindling North Sea reserves and supply from Norway1.
Carbon Brief reported that Russia and China were discussing four more gas pipeline projects, including "Power of Siberia 2", which would connect Russia with China via Mongolia, and a far eastern route from Vladivostok to China1. An official at Russia's Ministry of Energy said Russia planned to increase coal exports to China to 100m tonnes1. China also approved imports of wheat from Russia, with assurances that Russia would "take all measures" to prevent contamination by wheat smut fungus1.
The invasion itself triggered fresh worries about global energy supplies1. German chancellor Olaf Scholz stopped the approval process for Nord Stream 2 on the day Russian forces moved into separatist-controlled regions of Ukraine1. The EU targeted Russia's energy sector with an export ban on materials used by Russia for oil refineries, and the US and its allies said they would be "imposing severe and immediate economic costs on Russia"1. The UK banned Russia's national airline, Aeroflot, from landing in Britain, and British airlines were banned from Russian airspace in retaliation1.
Why it matters for households
The redirection of Russian gas towards China matters for a UK home because it changes where the world's pipeline gas can go. Gas delivered through the Power of Siberia system cannot be switched to European buyers, so volumes committed eastward under a 30-year contract are volumes that European markets cannot call on1. Europe takes the large majority of Russia's gas exports, and more than a third of Europe's gas supplies come from Russia1.
For UK households, the direct exposure is smaller. The UK sources less than 5% of its gas from Russian imports and relies largely on North Sea reserves and Norwegian supply1. But UK bills are set against wholesale gas prices that move with the wider European and global market, and Carbon Brief reported that up to 22 million households could already see a 54% spike in energy bills, from £1,277 to £1,971, on 1 April when the energy price cap is raised1. The same report noted that the German government is looking to accelerate renewable electricity to meet 100% of power demand by 2035, partly in response to the crisis1. How far the UK's own national supply arrangements insulate households from these flows is set out in the site's guides to Scotland, Wales and Northern Ireland.
What happens next
Carbon Brief reported that the European Commission would launch its long-planned communication on 2 March, citing EurActiv1. No further dated steps on the Russia-China deals have been reported.