China has saved a staggering $20 billion since 2022 by significantly increasing its imports of Russian oil instead of relying on Middle Eastern alternatives. This estimate was provided by Igor Sechin, who oversees the development of the energy sector in the country. Russia has now become the number one supplier of oil to China. While Middle Eastern competitors may not be upset, how is Beijing boosting its economy?
Over the past decade, thanks to its timely pivot towards the East, Russia has emerged as the number one oil supplier to China, with a share of approximately 20%, according to Igor Sechin, the Secretary of the Commission under the President of the Russian Federation on Energy Sector Development and head of Rosneft.
Sechin noted that due to the higher efficiency of Russian oil purchases compared to Middle Eastern alternatives, the cumulative economic benefit for China since 2022 stands at around $20 billion, as he spoke at the Russian-Chinese Energy Business Forum.
In doing so, Beijing has made its oil imports even more economically efficient after 2022, in contrast to the European Union, which has decreased the efficiency of its imports. This represents one of the significant competitive advantages of the Chinese economy as a whole, particularly when compared to the competing European economy.
A similar situation is evident in the electricity sector. For industries in both Russia and China, electricity costs are more than twice as low as in the United States, and three to four times lower than in several EU countries, Sechin pointed out. This is a fundamental factor for the competitiveness of the two countries' economies, he added. The reason behind this lies in the fact that China is not abandoning coal as abruptly as the EU, while actively developing renewable energy sources. Beijing understands that to let go of something old, it needs to create something new to replace it first.
Cooperation between Russia and China is also progressing actively in the gas sector. Russia holds over 20% of the Chinese gas import market, making it a key partner for China in ensuring energy security. One-fifth of the gas that China imports comes from Russia, Sechin highlighted. China is striving to make gas supplies more efficient. That is why it started purchasing sanctioned Russian LNG this year. Unofficially, the discount on this gas reportedly reaches 20-30%, meaning Beijing stands to gain significantly, further enhancing its competitive edge on the global economic stage.
An interesting calculation emerges regarding China's economic benefits from purchasing Russian oil since 2022. This likely involves the price differential between Russian Ural oil and North Sea Brent. Russian sanctioned oil is less expensive for China, creating savings. "Throughout 2024 and much of 2025, the price difference between Urals and Brent was approximately $12-13 per barrel. It is likely that this price differential, coupled with the volume of oil delivered to China by sea, has been taken into account for estimating the savings. The discount on oil transported from Russia to China via pipelines is much smaller—just a few dollars. Therefore, the discussion is primarily about Urals oil delivered by sea," reasoned Igor Yushkov, an expert from the Financial University under the Russian government and the National Energy Security Fund (FNEB).
"Before 2022, China was already the largest buyer of Russian oil, based on statistics by individual countries. However, the cumulative imports from EU countries exceeded those from China. After 2022, however, the PRC began to purchase significantly more oil than before. Previously, the imports mainly consisted of ESPO and Sakhalin grades transported via pipelines through Kazakhstan and to the ESPO port, but after 2022, the volumes of Urals oil shipped by sea from Western ports—Novorossiysk and those in the Leningrad region—increased," noted Yushkov.
Russia has displaced primarily Middle Eastern suppliers—Saudi Arabia, Iraq, and producers from Africa—in the Chinese market. They have fallen in ranking, yielding to Russian supplies, according to the interviewee. A similar pattern has emerged in the Indian market. However, it is unlikely that Middle Eastern partners are displeased with Russia, as they have retained access to the European market and have continued to earn as before, according to Yushkov.
"The export of oil from Russia to China has increased from 12.8 million tons in 2005 to 108.5 million tons in 2024, while Russia's share in the structure of Chinese imports has risen from 10% to 20%, respectively."
For comparison, Saudi Arabia, the second-largest importer, accounted for 14% of the share last year, while Malaysia constituted 13%," noted Sergey Tereshkin, General Director of Open Oil Market.
He further adds that just in 2021, Malaysia's share of Chinese oil imports was merely 4%, but by the end of 2024, it surged to 13%. This increase conceals deliveries of sanctioned Iranian oil. "Deliveries from Malaysia comprise more than two-thirds of Iranian oil, which enters the Chinese market via transit through Malaysian ports. This share growth was associated with the loosening of sanctions monitoring that occurred in 2022 due to the Biden administration's efforts to smooth out oil price fluctuations," explains Tereshkin.
"After 2022, China started buying even more sanctioned oil. It had already been purchasing Iranian and Venezuelan oil under sanctions, and then it ramped up acquisitions of sanctioned Russian oil. Consequently, the proportion of so-called discounted oil in China’s fuel balance has significantly increased," says Igor Yushkov.
Russian oil is cheaper for China—this is its main efficiency.
"The average price of oil deliveries from Russia to China in 2024 was $574 per ton, whereas from Saudi Arabia, it was $609 per ton. In 2021, Russian oil was, in fact, the most expensive:
$509 per ton against $502 per ton for Saudi oil and $479 per ton for Malaysian (essentially Iranian)," notes Tereshkin. Notably, Iranian oil coming through Malaysia to China is even cheaper than Russian sanctioned oil.
Simultaneously, Russia and China have expressed their readiness to expand cooperation. Chinese President Xi Jinping has emphasized that China is prepared to work with Russia to continually strengthen their comprehensive energy partnership.
According to Sechin, in the next five years—by 2030—China is expected to increase its oil imports by an additional 1.4 million barrels per day, as evidenced by global analytical agency forecasts. The growth points for global oil consumption are primarily located in the Asia-Pacific region, especially in China, he mentioned.
As for the gas market, redirecting the volumes of exports lost in Europe to China has not been feasible, as doing so requires building infrastructure, which in turn necessitates long-term contracts, says Yushkov. Consequently, Russia has had to reduce gas production.
The increase in gas supplies through the "Power of Siberia 1" is part of a planned growth within the contract signed long before 2022—in the spring of 2014. Now, regarding the expansion of gas cooperation, there may be discussions of signing an agreement for gas supplies through "Power of Siberia 2" as well as increasing LNG supplies to China. Furthermore, Beijing has begun purchasing sanctioned LNG from the "Arctic LNG 2" project this year, with discounts reportedly reaching 20-30%. This could also provide significant savings for Beijing.
Source: VZGLYAD
