The petroyuan is the big bet of Russia and China


After the economic sanctions that the United States and the European Union imposed against Russia, Moscow and Beijing put together an imposing energetic team that has radically transformed the world oil market. In addition to increasing their interchange of hydrocarbons exponentially, both oriental powers have decided to put an end to the domination of the dollar in fixing the prices of the black gold. The petroyuan is the instrument of payment of strategic character that promises to facilitate the transition to a multipolar monetary system, a system that takes various currencies into account and reflects the correlation of forces in the current world order.
| Mexico City (Mexico) | 20 May 2016

In place of humiliating Russia, the “economic war” that Washington and Brussels had promoted was counterproductive, since it only contributed to fortify the energy team between Moscow and Beijing. We recall that in May of 2014 the Russian company Gazprom agreed to supply gas to China up to 38 billion cubic meters annually during three decades (starting in 2018) through the signing of a contract for 400 billion US dollars with the China National Petroleum Corporation (CNCP) [1].

At the present time both powers coordinate the work of an ambitious plan of strategic projects that include the construction of gas and oil pipelines as well as the combined operation of refineries and large petrochemical complexes. Without proposing to do so, the coming together of Moscow and Beijing has produced deep changes in the world oil market in favor of the Orient, dramatically undermining the influence of Western petroleum companies.

Even Saudi Arabia, that until recently was the principal supplier of petroleum to the Asian giant, has been undermined by Kremlin diplomacy. While from 2011 the petroleum exports of Saudi Arabia to China were growing at a rhythm of 120 thousand barrels per day, those of Russia grew at a velocity of 550 thousand barrels per day, that is to say, almost five times more rapidly. In fact, in 2015 the Russian companies managed to overcome the sales of petroleum from the Saudis four times: Riyadh had to conform with being the second provider of crude to Beijing in May, September, November and December [2].

It is worth noting that the countries that make up the European core have also seen their share of the market diminished in the face of the Asian region: Germany, for example, was supplanted by China at the end of 2015 as the greater buyer of Russian petroleum [3]. In this way, the great investors operating in the world oil market can hardly believe how, in a few months, the principal purchaser (China) became the favorite client of the third major producer (Russia). In accord with the Vice-President of Transneft (the Russian company charged with the implementation of national oil pipelines), Serge Andronov, China is disposed to import a total volume of 27 million tones of Russian petroleum during 2016 [4].

The Russian-Chinese energy alliance is proposed to go longer. Moscow and Beijing have made their interchanges of petroleum a channel of transition towards a multipolar monetary system, that is to say, a system that is no longer based on the dollar alone, but takes into account various currencies and above all, that reflects the correlation of forces in the current world order. The economic sanctions imposed by Washington and Brussels drove the Russians to eliminate the dollar and the euro from their commercial and financial transactions, since otherwise, they would be too exposed to suffer sabotage in the moment of realizing buying and selling operations with their principal trading partners.

For this reason, from mid-2015, the hydrocarbons that China buys from Russia are paid in yuans, not in dollars, information that has been confirmed by high executives of Gazprom Neft, the petroleum branch of Gazprom [5]. This has lead to the use of the “people’s currency” (‘renminbi’) in the world oil market and at the same time allows Russia to neutralize the economic offensive launched by the United States and the European Union. The underpinnings of a new financial order supported by the petroyuan is emerging: the Chinese money is preparing to become the axis of commercial exchanges of the Asian-Pacific region with the principal petroleum powers.

Please click on the link to FINISH READING of the original article

Categories: Business, China, Russia

Tagged as:

1 reply »

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.