“We and the Chinese need each other,” said Nikolai Tokarev, the head of Transneft, a state company responsible for the Russian portion of the pipeline. “They need oil, and we need a market,” added the Russian, a longtime associate of Prime Minister Vladimir Putin.
When it came time to settle accounts for the first deliveries, however, Tokarev got an unpleasant surprise: China, Transneft says, underpaid by more than $100 million. “Naturally, this did not cause delight,” Tokarev said. “We were surprised because there is a contract and this contract has signatures. It should be respected.”
The dispute hasn’t shut down the pipeline, but it has put a spotlight on a curious malaise at the heart of a would-be energy axis between Moscow and Beijing. While the law of supply and demand — as well as a common desire to curb the United States — pushes the two countries together, a long history of mutual distrust, similarly hard-nosed business styles and gnawing fear of dependency keeps them apart.
“They look like the perfect partners, but this is a marriage made in hell,” said a Western energy executive who has worked with both countries. Russia and China, he added, are “so afraid of being outdone” by each other that negotiations tend toward all-or-nothing combat.
‘Deep lack of trust’
The economic imperatives for greater cooperation remain powerful and, predicted a report issued last month by the International Energy Agency, should ultimately prevail, with China’s share of Russia’s total earnings from fossil fuel exports forecast to rise from the current 2 percent to 20 percent in 2035. But economic logic has rarely run in a straight line between Beijing and Moscow.
China desperately needs what Russia has in abundance — oil, natural gas, coal, mighty rivers for hydropower, and nuclear know-how. And Russia, seeking to position itself as an “energy superpower,” has increasingly looked to China to help boost its economic and political clout.
Between 2000 and 2010, China nearly doubled its consumption of oil, and it is on track to overtake the United States as the biggest petroleum importer by the end of the decade.
To feed this demand, and their own bottom line, state-owned energy behemoths such as China National Petroleum Corp., or CNPC, have scrambled for supplies across the Middle East and Africa and closer to home in the disputed waters of the South China Sea.
But perhaps no other country has offered quite as much promise — and frustration — as Russia, which produces more oil than even Saudi Arabia, sits just next door to China and, because of the retreat from democracy under Putin, is often on much the same wavelength as Beijing’s own authoritarian leaders.