The three largest Chinese oil and gas companies continue to implement joint projects with Russia and finance Russia’s strategic industry by paying significant taxes. The National Agency on Corruption Prevention (NACP) has added China National Offshore Oil Corporation (CNOOC Group), China Petrochemical Corporation (Sinopec Group), and China National Petroleum Corporation (CNPC) to the list of international sponsors of war.
- CNOOC Group is the third largest national oil company in China after CNPC and Sinopec. It is the largest offshore oil and gas producer in China.
The subsidiary CNOOC Limited, as well as another Chinese company, CNPC, have a 10% stake in the Arctic LNG-2 project located on the Gidan Peninsula in the Arctic region of Russia. Capital investments for the launch of the Arctic LNG-2 project at full capacity are estimated at USD 21.3 billion.
Since the beginning of the full-scale invasion, the company has continued to actively increase cooperation with Russia. In July 2023, the first floating gravity-based liquefaction of natural gas (LNG) line, the so-called floating plant, of the Arctic LNG-2 project was completed and launched. The President of the aggressor country, Vladimir Putin, personally attended the opening ceremony.
The implementation of this project could increase Russia’s share of the global liquefied natural gas market to 15%, provided its current share is 8%.
Russian propaganda also pays extraordinary attention to the project’s implementation. “Its implementation is a “pass” abroad, as liquefied gas is not subject to sanctions or other secondary restrictions. Gas from Russia is a kind of insurance that unreliable overseas suppliers will not be the only ones to dictate conditions to customers in the market during the winter heating season.
Infrastructure facilities for liquefying natural gas show that there is no such thing as isolation of Russia from the rest of the world and technology, as Western propaganda says. The commissioning of such a plant will be a triumph that will refute all the narratives of the West,” Russian media reported.
- Sinopec Group is China’s second-largest state-owned company, engaged in fossil fuel production and specializing in crude oil refining.
At the end of March 2022, a Sinopec spokesperson said that the Chinese state-owned energy company would continue to buy crude oil and gas from Russia even if Western democracies tightened sanctions in response to Russia’s invasion of Ukraine.
The corporation owns a 10% stake in PJSC Sibur Holding, while in the first half of 2023, the Russian holding paid taxes to the budget of the aggressor state in the amount of RUB 33 billion (or USD 347 million);
Sinopec also owns a 40% stake in the Amur Gas Chemical Complex LLC through its controlled Soichl Hong Kong Holding Limited. In 2022, this company paid taxes in the amount of RUB 2.1 billion (or USD 30 million) to the budget of the Russian Federation.
- China National Petroleum Corporation is China’s largest national oil and gas corporation and one of the world’s largest oil and gas production companies.
In 2022, the corporation’s profit increased more than twice, resulting in a USD 21 billion profit. This is amid a global decline in oil supplies, partly due to the war in Ukraine.
China National Petroleum Corporation has significant integration with Russia’s largest oil and gas companies as well as the government of the terrorist state. The main joint projects include:
– Yamal LNG (a joint project with the sanctioned company Novatek, in which CNPC holds a 20% stake)
– Arctic LNG-2 project (a joint project with the sanctioned company Novatek PJSC, in which CNPC holds a 10% stake);
– the Power of Siberia gas pipeline (CNPC and the sanctioned JSC Gazprom are the operators of the said gas pipeline);
– Skovorodino-Mohe-Daqing oil pipeline, etc.
Owning a share of companies in Russia, CNPC pays significant taxes to the aggressor’s budget, which allows it to continue this war. For example, Yamal LNG paid RUB 80 billion (or USD 1.14 billion) as income tax in 2022.
In addition, in September 2022, Gazprom and CNPC agreed to switch to paying for services in national currencies (RUB and CNY), which strengthens and stabilizes the Russian ruble despite the sanctions.
It is also worth recalling that the government of Russia increased the income tax rate for LNG exporters from 20% to 34% on January 1, 2023, for a period of three years. This means that taxes on liquefied natural gas exports will almost double (+70%) the revenue of the Russian budget.
