Western Sanctions Open Doors for Russia to Forge Stronger Ties With East

Analysts are expressing optimism for Russia’s shift to its Asian partners to fill in the gap that has been left open by fleeing Western investors.

On March 27 China announced it would be providing French oil giant Total with $15 billion to invest into the Yamal LNG project in northern Siberia.

The $27 billion investment project in the Yamal Peninsula, which is owned by private Russian gas company Novatek (60%), Total (20%) and China’s CNPC (20%), aims to tap into northwest Siberia’s abundant natural gas reserves, which contain 84% of Russia’s total natural gas, and double Russia’s share in the fast growing liquefied natural gas market.

The project is set to begin in 2017 with Yamal LNG exporting 16.5 million tons of LNG a year.

Faced with western sanctions, Russia decisively turned towards the East.

China and Russia have signed a 20-year $700 billion agreement for gas deliveries to China worth some 17% of Beijing’s annual consumption.

India and Russia signed a series of bilateral agreements, named ‘Druzhba-Dosti’, intended at promoting cooperation in the defense and energy industries of the two countries. In addition to that, Russian Rosneft and Gazprom together with their Indian colleagues are creating projects for the development of Russian-Arctic and the expansion of liquefied gas.

Out of the 61 large oil and gas fields that have been discovered within the Arctic Circle territories, which include Russia, Alaska, Canada and Norway, 42 are located in territory belonging to Russia.

Russia’s shift to its Asian partners indicates a distressing signal for the future of investment opportunities of Western companies, which tied down by the sanctions regime cannot cooperate with Russia.

One thing is clear, emerging powers and partners of Russia are more than willing to fill in the gap that has been left wide open by fleeing Western investors.