Russia sees scope for oil exports boost to China, urges cooperation in LNG

MOSCOW (Reuters) -Russia sees scope to boost oil exports to China and to deepen cooperation on supplies of liquefied natural gas, Russian Deputy Prime Minister Alexander Novak said on Tuesday in Beijing.

China and India have become the main buyers of Russian oil since the start of Russia's military campaign in Ukraine in February 2022. China imports roughly 1.4 million barrels of Russian oil per day by sea and approximately 900,000 bpd of Russian oil by pipeline.

Last month the U.S. introduced sanctions on Russia's two largest oil producers, Rosneft and Lukoil.

Russian President Vladimir Putin derided the sanctions, saying they would not significantly affect the Russian economy and talking up Russia's importance to the global market.

There have been conflicting reports about prospects for Russian oil supplies to China and India, while Russia's overall crude exports have been relatively steady so far.

Novak told a Sino-Russian business forum in Beijing that Russia had been discussing with Chinese partners the possibilities of expanding oil exports to China.

"We see prospects for increasing oil supplies via pipeline routes and by sea," he said.

He mentioned that intergovernmental agreements provide for the possibility of extending the oil supply terms to China through Kazakhstan until 2033.

He later met Chinese Vice Premier Ding Xuexiang, the Russian government said.

"Russia is a reliable supplier of oil and gas to China. We will continue to actively work on expanding energy cooperation as a key area of partnership between the two countries," Novak was quoted as saying at the meeting.

Ding, speaking at the same forum, called for the two countries to enhance cooperation across industrial chains, to ensure "safe and stable operation of cross-border energy channels", and to safeguard smooth energy trade, Chinese state news agency Xinhua reported.

Ding also proposed cooperation in energy transition and renewables.

Russia has also been cooperating with China in production and exports of sea-borne LNG.

China's state energy giant CNPC has a 20% stake in Russia's Yamal LNG plant, while China's Silk Road Fund owns 9.9% in the Novatek-led project.

LNG exports from Russia have been restrained by U.S. sanctions over Ukraine, notably against the new Arctic LNG 2 plant, which have significantly limited the use of tankers for fuel transportation.

China received its first LNG cargo from the sanctioned Russian project at the end of August, days before a meeting between Putin and Chinese President Xi Jinping.

Novatek, which is co-owned by some of Putin's closest allies, has sold about 14 cargoes of LNG since August, with Chinese buyers receiving discounts of about 30% to 40%.

"Amid external challenges, it is critically important to continue, through joint efforts, creating the necessary conditions for the implementation of joint projects," Novak told the forum.

(Reporting by Reuters. Additional reporting by Chen Aizhu in Singapore. Editing by Mark Heinrich, Guy Faulconbridge and Mark Potter)