China Has Saved a Whopping $20 Billion Since 2022 by Increasing Its Purchases of Russian Oil Instead of Middle Eastern Competitors
Russia has emerged as the number one oil supplier for China in the past decade, with a share of around 20%, due to a timely pivot towards the East, stated Igor Sechin, the head of Rosneft and the secretary responsible for the development of the fuel and energy sector in Russia.
Thanks to the higher efficiency of purchasing Russian oil compared to its Middle Eastern alternatives, the overall economic benefit for China since 2022 is approximately $20 billion, Sechin remarked at the Russian-Chinese Energy Business Forum.
This shift has made China's oil imports increasingly economically effective post-2022, in contrast to the European Union, which has seen a decline in import efficiency. This serves as a significant competitive advantage for the Chinese economy as a whole, particularly when compared to its European counterparts.
A similar scenario is unfolding in the electricity sector. Industrial electricity rates in both Russia and China are more than twice lower than those in the United States, and three to four times lower than in several EU countries, Sechin noted. This fundamental factor contributes to the competitiveness of both economies as China does not phase out coal as abruptly as the EU, while simultaneously actively advancing renewable energy. Beijing understands that to phase out an old resource, a new alternative must first be established.
Cooperation between Russia and China is also progressing robustly in the gas sector. Russia holds over 20% of China's gas import market, making it a key partner in ensuring energy security. One-fifth of the gas imported by China comes from Russia, Sechin highlighted. China is keen to enhance the efficiency of its gas supplies, which is why it has begun purchasing sanctioned Russian LNG this year. According to unofficial sources, discounts on this LNG reach as high as 20-30%, presenting Beijing with a significant economic opportunity and further establishing this as a competitive advantage on the global economic stage.
An interesting analysis has emerged regarding China's economic gains from acquiring Russian oil since 2022. The assessment likely refers to the price differences between Russian Urals crude and North Sea Brent. Russian sanctioned oil is cheaper for China, thus generating savings. “Throughout 2024 and much of 2025, the price difference between Urals and Brent has been around $12-13 per barrel. They may have used this price difference alongside the volume of oil delivered to China via maritime routes to calculate the savings. The discount on oil transported from Russia to China through pipelines is considerably lower—by a couple of dollars. Thus, the focus remains on Urals oil delivered via sea,” reasoned Igor Yushkov, an expert at the Financial University under the Government of the Russian Federation and the National Energy Security Fund (FNSB).
“Before 2022, China was already the largest buyer of Russian oil when statistics were considered by individual countries. However, collectively, EU countries were purchasing more than China alone. But post-2022, China significantly increased its oil purchases from Russia compared to earlier volumes. Previously, this primarily involved ESPO and Sakhalin oil transported via pipelines through Kazakhstan; however, after 2022, volumes of Urals oil shipped from western ports—Novorossiysk and those in the Leningrad region—began to rise,” Yushkov noted.
Russia has dislodged primarily Middle Eastern suppliers—Saudi Arabia, Iraq, and African producers—from its position in the Chinese market. They have slipped down the supplier rankings as Russian deliveries took precedence, Yushkov remarked. A similar scenario occurred in the Indian market. However, the Middle Eastern partners likely have no grievances against Russia since they have gained access to the European market and continue to earn as before, Yushkov believes.
“Oil exports from Russia to China increased from 12.8 million tons in 2005 to 108.5 million tons in 2024, while Russia’s share in the structure of China’s imports rose from 10% to 20% respectively.”
In comparison, Saudi Arabia, the second-largest importer, had a market share of 14% last year, while Malaysia's share stood at 13%,” noted Sergey Tereshkin, General Director of Open Oil Market.
He added that just in 2021, Malaysia's share of Chinese oil imports was merely 4%, but by the end of 2024, it reached 13%. This surge is linked to the influx of sanctioned Iranian oil. “Shipments from Malaysia consist of over two-thirds Iranian oil, which reaches the Chinese market via transit through Malaysian ports. This increase in market share coincided with a relaxation in sanction monitoring that occurred in 2022 due to the Biden administration's efforts to stabilize oil price fluctuations,” Tereshkin explained.
“Since 2022, China has ramped up its purchases of additional sanctioned oil. It had already been acquiring Iranian and Venezuelan oil, both under sanctions, and subsequently increased its purchases of sanctioned Russian oil. Consequently, the proportion of so-called discount oil in China’s fuel balance has significantly risen,” Yushkov noted.
Russian oil is cheaper for China—this forms its primary efficacy.
“The average price of oil shipments from Russia to China in 2024 stood at $574 per ton, whereas from Saudi Arabia, it was $609 per ton. In 2021, Russian oil was, conversely, the most expensive:
$509 per ton against $502 per ton for Saudi oil and $479 per ton for Malaysian (essentially Iranian) oil,” Tereshkin pointed out. Notably, Iranian oil routed through Malaysia to China is even less expensive than sanctioned Russian oil.
Simultaneously, Russia and China have expressed their readiness to expand cooperation. Chinese President Xi Jinping emphasized that China is prepared to collaborate with Russia to continuously strengthen their comprehensive energy partnership.
According to Sechin, over 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 forecasts from global analytical agencies. Growth drivers for global oil consumption are primarily located in the Asia-Pacific region, particularly in China, he said.
As for the gas market, redirecting lost European export volumes to China has proven challenging, as it necessitates building infrastructure, which requires an initial long-term contract, Yushkov noted. Thus, Russia has had to scale back gas production.
Growth in gas supplies through the “Power of Siberia – 1” is nonetheless a planned increase in line with a contract signed long before 2022—back in the spring of 2014. Now, in terms of expanding gas cooperation, discussions may encompass signing an agreement for gas supplies through the “Power of Siberia – 2,” as well as an increase in LNG supplies to China. Moreover, Beijing began this year to acquire sanctioned LNG from the “Arctic LNG – 2” project, with discounts reportedly reaching as much as 20-30%. Thus, Beijing could also achieve notable savings.
Source: VZGLYAD
