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China is considering buying shares in Russian energy and commodity companies

Sources say it will step up China’s imports as it strengthens its focus on energy and food security, not as an indication that China supports Russia’s invasion of Ukraine. ..

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China is considering buying or increasing stocks in Russian energy and commodities companies such as gas giant Gazprom PJSC and aluminum producer Rusal International PJSC, according to people familiar with the matter.

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People say Beijing is discussing potential investment opportunities in Russian companies and assets with state-owned enterprises such as China National Petroleum Corporation, China Petrochemical Corporation, China Aluminum Corporation, and China Petrochemical Corporation. rice field. People said it was to strengthen China’s imports as China strengthened its focus on energy and food security, and did not show support for Russia’s invasion of Ukraine.

People say the debate is in its infancy and does not necessarily lead to an agreement, demanding anonymity because the debate is not open to the public. Some talks have begun between Chinese and Russian energy companies, according to another source.

CNPC and China National Petroleum Corporation (known as the Synopec Group) declined to comment, according to media sources at both companies. China’s State Council state-owned asset regulators Sasak, Aluminum Corporation of China, and Minmetals did not immediately respond to requests for comment. And Rusal did not immediately comment during Russia’s national leave.

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Russia’s war in Ukraine has put pressure on Beijing to secure imports as energy, metal and food costs skyrocket to unprecedented levels. Concerned about the impact of rising prices on the economy, senior Chinese government officials have ordered that the safety of commodity supply be a priority. , Bloomberg reported last week.

China has vowed to continue its normal trade relationship with Russia, despite a large outflow of Western companies. BPPlc, Shell Plc and Exxon Mobil Corp. have surprised the energy industry by moving away from billions of dollars worth of Russian wealth.

Meanwhile, China’s Foreign Minister Wang Yi said earlier this week that relations between China and Russia were “solid”, despite Beijing expressing concern over civilian casualties and calling for peace talks to end the war. Said there was. Cnooc Ltd., a 20% stake in the Yamal LNG Project and a 10% stake in Arctic LNG 2, also owns a 10% stake in the Arctic.

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President Xi Jinping and President Vladimir Putin signed a series of agreements last month to increase Russia’s gas, oil and wheat supplies, and the two countries have already strengthened their ties. Prior to the Winter Olympics, two leaders met in Beijing.

Still, investing in Russia carries risks that go beyond the geopolitical equilibrium law that Beijing faces. As the country’s economy deteriorated rapidly, Russia became a market that was almost uninvestable for global companies. Sanctions have wiped out billions of dollars from Russian wealth. Bonds have plummeted and the yuan has soared against the ruble, questioning the strategic relationship between the two countries as the risk of default rises.

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China’s investment could help solidify Moscow’s efforts to accelerate the so-called “pivot to Asia” in oil and gas supply transactions. China has doubled Russia’s energy product purchases to about US $ 60 billion over the past five years.

The Power of Siberia pipeline will begin sending gas to China in 2019, and Gazprom is already in talks with China on another route that could be signed this year, eventually from a gas field supplying Europe. You will be able to transport fuel.

Bloomberg.com

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