What Happened: Novatek, the second-largest Russian producer of natural gas, signed a preliminary joint venture with China Petroleum Corp. and Gazprombank to trade liquefied natural gas on China's domestic market, Hellenic Shipping News Worldwide reported June 7. Novatek also formed a partnership with China National Petroleum Corp. and China National Offshore Oil Corp. to develop an Arctic natural gas facility; the two Chinese companies will hold 10 percent stakes a piece in the project, South China Morning Post reported June 6. The deal is part of $20 billion in deals covering a multitude of projects, including nuclear power, high-tech development and 5G communications, signed between Beijing and Moscow during and immediately before the June 6-8 St. Petersburg International Economic Forum. They also included increased Russian soybean exports to China, and discussions on a $153.3 million investment to create a joint agricultural holding company in Primorsky Krai in Russia's Far East.
Why It Matters: The recent deals shed light on just how far Beijing and Moscow will be willing to cooperate in the Arctic in energy and other matters. Japan had sought energy agreements with Russia in the Arctic, but ongoing territorial issues between the countries have so far prevented this from happening. Agricultural cooperation between China and Russia meanwhile is part of Beijing's efforts to find reliable soybean and corn sources other than the United States, though the fewer than 1 million metric tons of soybeans Russia exported to China in 2018 will hardly offset the 25 million metric tons China annually imports from the United States.
Context: China and Russia signed a host of economic deals during Chinese President Xi Jinping's visit to Russia. The 30 agreements included a 5G contract between Huawei and Russia's MTS, joint construction of hydropower plants in Russia and in third countries, and the establishment of a $1 billion joint research and technology innovation fund.
Why China Wants to Expand Its Arctic Footprint (Dec. 24, 2018)
Joint Interests Against the U.S. Deepen the Sino-Russian Embrace (Nov. 5, 2018)
The Rise of a Not-So-New World Order (Nov. 15, 2017)