Russian President Vladimir Putin and Chinese leader Xi Jinping. Photo: Dazhi Image Associated Press/China Government Network (New Head and Shell Synthesis)
Russia invaded Ukraine militarily on February 24, and Western countries imposed many sanctions on Russia. The Beijing authorities have repeatedly expressed their opposition to the sanctions, insisting that they will maintain normal economic and trade exchanges with Russia, and refused to condemn Russia’s actions in Ukraine, nor did they want to. Call it “invasion”. China’s state-run Sinopec, however, is said to be suspending talks with Russia over major petrochemical investments and gas sales plans following Beijing urged companies to be cautious regarding investing in Russia.
Asia’s largest oil refiner suspends a potential $500 million investment in a gas-to-chemicals plant and plans to sell Russian gas in China, underscoring a previously unanticipated Western crisis even for Russia’s most important diplomatic partner, China. Dominating heavy sanctions has created serious risks. While Russia wants a closer alliance with China, Beijing is wary of Chinese companies involved in sanctions violations and has warned Chinese companies to be careful with their investments in Russia.
Since Russia invaded Ukraine a month ago, three of China’s energy giants, China Petroleum & Chemical Corporation, China National Petroleum Corporation (CNPC) and China National Offshore Oil Corporation (CNOOC) have all started operations, sources familiar with the matter said. Assess the impact of sanctions on their multibillion-dollar investments in Russia.
“In this crisis, companies will strictly follow Beijing’s foreign policy stance. There is no room for companies to accept new investment plans,” said one executive at a state-run oil company. China’s Ministry of Foreign Affairs, two people familiar with the meeting, said. May summoned officials from three major energy companies to review their business relationships with Russian partners and local companies. One of them mentioned that the foreign ministry urged them not to buy Russian assets too hastily.
The companies have formed task forces on Russia-related issues and are developing contingency plans for business disruptions and secondary sanctions, the sources said. The sources asked not to be named because of the sensitivity of the matter. Sinopec and other companies declined to comment. China’s foreign ministry did not respond to a request for comment. U.S. President Joe Biden has clearly warned Chinese leader Xi Jinping that China knows its economic future is closely tied to the West, and that Beijing will regret siding with Russia on the issue of Russia’s invasion of Ukraine.
A source pointed out that Sinopec has suspended discussions with Russia on a plan to build a new gas-to-chemical plant in Russia, worth an investment of $500 million. The investment plan was originally to join hands with Russia’s largest petrochemical company Sibur, with Sinopec accounting for 40% and Sibur accounting for 60%. Integrated Plant Project” (Amur Gas Chemical Complex).
The source added that the two companies wanted to replicate the Amur project to build another factory and had already entered the site selection stage, but Sinopec learned that Timchenko, a longtime ally of Russian President Vladimir Putin, who is under Western sanctions (Gennady Timchenko), who holds a minority stake in Siebull and is a member of the board of directors, backed down.
The European Union and Britain announced sanctions last month on Timchenko and other Russian billionaires with friendly ties to Putin. A spokesman for Timchenko declined to comment on the sanctions. Funding for the Amur project itself is also in crisis, two sources told Archyde.com, as sanctions might cut off major lender Sberbank’s funding chain with European credit agencies.
