Russia is continuing its economic reorientation towards Asian countries in response to the economic sanctions imposed by Western countries because of its offensive against Ukraine. The Russian Deputy Prime Minister in charge of Energy, Alexander Novak, announced that oil exports to India had increased 22-fold by 2022. These results are part of a strategy to compensate for contracts lost in Europe.
The Indian and Chinese markets are among the top countries targeted by Russia to compensate for the contracts lost in Europe. Both countries are major energy consumers and represent an opportunity for Russia to redirect its oil and gas exports. At a summit last week with Chinese President Xi Jinping, Russian leader Vladimir Putin announced the completion of the giant Siberian Force 2 gas pipeline, which is to link Siberia to China’s Xinjiang.
However, if Russia is enthusiastic, the reality is more contrasted. Russia’s dependence on Asian heavyweights allows China and India to negotiate lower prices. Economists at the Association of Major Global Banks and Financial Institutions said China, India and Turkey accounted for two-thirds of Russian crude exports in the fourth quarter of 2022.
Faced with this situation, Russia intends to expand its horizons. Mr. Novak emphasized the urgency of reaching new markets in the Asia-Pacific, Latin America, Central Asia and even the Arctic. To do this, it is necessary to set up supply chains, train a fleet of tankers and create payment instruments.
The reorientation of Russia’s oil exports to Asian countries is therefore a necessary strategy to compensate for the contracts lost in Europe. However, dependence on Asian heavyweights can also present risks for Russia, which must continue to diversify its markets to ensure economic stability.
