Author: Sheng Tang rushong source wechat official account: the chief shopkeeper’s knife has been authorized to reprint
Since the war between Russia and Ukraine, whether Russia can not afford to fight this war and bow its head to admit defeat has been the most concerned thing of European and American countries. Unprecedented sanctions are also aimed at making Russia unable to continue the trade channels it previously maintained due to the obstacles of the trade settlement platform; Because the United States and Europe cut or even cut off the purchase of goods from Russia and lost their economic sources. In short, as long as the Russian economy collapses because of the war, Europe and the United States, especially European countries, would like to beat Russia to death with seven injuries, even if they vomit blood and die.
However, up to now, Russia’s economy seems to be more and more flexible. Not only the exchange rate of the ruble has reached a new high, but also the Russian energy that Europe and the United States resolutely do not buy has not been hit. Although the export volume can not be said to increase instead of decreasing, it has not delayed Russia’s expenditure of exchanging its own oil and gas for money to support the war.
According to the estimates of relevant institutions, Russia’s oil and gas revenue in 2022 will be as high as US $800million a day, while the average daily war consumption of Russia reported by the United States is US $900million a day. By comparison, it seems that the deficit caused by Russia is not large. However, the average daily consumption of the war reported by Russia was 340million US dollars. According to the data of Russia, its income can fully support this war to become a protracted war. In 2021, Russia’s average daily energy income was US $640million. In other words, Russia’s energy income has increased by 160million US dollars. As long as the Russian people tighten their belts a little, there is no problem that the war will continue.
So where did the Russian money come from? It should be noted that the United States has apparently completely eliminated the entry of Russian energy, and Europe has recently formulated the policy of canceling two-thirds of Russian energy imports [marine energy will be completely eliminated]. As we all know, the main export direction of Russian energy is Europe, followed by China, India, Japan and South Korea. Now, Japan and South Korea also follow the U.S. policy to minimize the import of Russian energy. Can the remaining China and India make up for the losses caused by Russian energy exports?
The answer is yes. It is needless to say that Russia is currently building crude oil refineries in Northeast China. This Sino Russian cooperation project will provide a large destination for Russia’s future energy export and refining, and also ensure that Russia’s energy can obtain a relatively large consumer market. China and Russia are highly complementary in energy. But after all, the water is far from understanding and the thirst is near. Because Russia focuses on Europe and India as much as possible in energy cooperation, the energy pipeline cooperation with China has made great progress in recent years. These are far from enough to make up for Russia’s losses in the European market.
Thus, India made a magnificent debut. India has an advantage over China that we cannot envy. That is, it is called “the largest democracy in the world” by the western world. It can do a lot of trade with the West that China cannot reach. Due to India’s huge population base and superior geographical environment, it also implements the ‘democratic system’ recognized by the West. Therefore, India has fewer obstacles to trade with western countries. It is also a country that western countries have always hoped to replace China. We can’t envy or get the Western concessions to India.
However, India pursues a non aligned foreign policy and is not willing to be tied up with western countries. [naturally, it cannot be tied up, otherwise India’s life will be more difficult.] Therefore, in the unified actions taken by the western world, India often has its own choices. For example, India is not in harmony with the western world in the sanctions against Russia this time. For this reason, the leaders of Australia, the United States, Japan, Britain and some European countries visited India one after another, hoping that India could change its policy towards Russia, but India just ignored it, not only did not listen to the call of the western world, but also increased the import of Russian energy.
However, although India is the second most populous country in the world [on the issue of the first populous country, according to the 2020 United Nations Population Survey and the data of the world famous real-time statistics website worldmeter, India’s current population has not surpassed China, but it has become the first populous country in recent years], India’s market consumption level is not high, Per capita consumption is only about 70% of that of China. China has 19.9 cars per 100 people, while India has only 2.7. With roughly the same population, China’s car ownership is more than seven times that of India. Not to mention the level of industrialization in China, it is also unknown how many times that of India. Compared with steel production alone, China is about ten times that of India. Automobile and industry are the major energy consumers. Therefore, a large part of India’s increased energy imports from Russia is not used for domestic consumption and domestic energy reserves, but as a middleman.
For example, India’s energy imports from Russia increased by a full nine times in April. According to India’s own normal consumption, it can fully meet India’s energy consumption and energy reserves by doubling at most. It is totally abnormal to increase this figure by 9 times. And even if India buys discounted energy from Russia, India may not have so much cash to pay for these energy. You know, Russia can sell energy cheaply, but it must pay in cash. Now that Russia is in war, the demand for cash and materials is imminent. Obviously, it can’t get so much energy from Russia. So where did India raise the money?
The answer is very funny. After India bought discounted crude oil from Russia at 60% of the market price, it refined the crude oil into petrochemical products [gasoline, diesel and other products] needed by the West in Indian refineries, and then sold them to Europe and the United States at the market price. In this way, Europe and the United States have not only bypassed their own sanctions against Russia, but also obtained Russian oil and energy. It just makes India a ‘smart’ guy cheap. The money earned from this one in and one out is not just the energy price difference. At least, the number of employed people in related industries in India will be greatly increased. From full-scale petrochemical plants to wharf transportation and shipping vessels, India is now very busy.
This can also be regarded as a targeted poverty alleviation for India by Europe and the United States. However, it is a pity that if comprehensive industrial support is not provided to India, this energy price difference opportunity will be a windfall for India, which cannot be transformed into an industrial scale advantage in the future. But who knows? What if India can seize this opportunity.
This model is not feasible in China. First, western countries will not allow China to make this money. Second, China’s own demand for energy is still very strong. With the improvement of this round of epidemic situation, China’s production scale will certainly recover after the coming of summer. Even if Russia’s energy entering China through pipeline runs at full capacity, it is only a drop in the bucket. The refineries that China and Russia are preparing to build in the Northeast will only produce benefits in the future. Moreover, Russia’s cooperation with China this time has obvious significance for Europe: warning Europe that if China Russia energy cooperation is on track, it will not be so easy for Europe to want Russia to turn back in the future. Therefore, if Europe is soft to Russia before the project is fully completed, there are still variables.
Like the Sakhalin II energy project currently under negotiation. Shell needs to withdraw from the project at the request of its own government, and its 27.4% stake is seeking to be transferred. Mitsui and Mitsubishi jointly hold 12.5% of the shares of the company. Now Russia is asking Japan to withdraw from the project. [60% of the energy produced by this project is supplied to Japan, so Japan firmly refuses to withdraw]. Who will take over the shares transferred by shell? It is said that China is the most suitable successor country, and China’s CNOOC and Sinopec have almost talked with shell. But Russia’s preference is for India to take over the shell stake. However, it is hard to say whether India has such strength. Now this matter is still in the game.
It is understandable that Russia does not want to tie China too tightly. Therefore, China cannot expect to be really close to Russia in China Russia cooperation. After all, we are all world-class powers with our own international interests and geographical considerations. Although Russia will be closer to China this time because of the Russo Ukrainian war, the subsequent variables should be taken into account. However, with the new choice opportunity brought to Russia by the Russian Ukrainian war, there is no doubt that the level of cooperation between China and Russia has been improved. It is also true that China has won some development opportunities because of this opportunity.
India is a big winner this time. In fact, the winner is not only India, but also China, the United States and other countries, even Latin American countries. With the deepening of the friendship between the United States and Russia, most countries in the world have the opportunity to make new choices. Otherwise, the Latin American Summit held by the United States will not be so bleak.
Europe is the most injured. According to an estimate by a German Agency, Germany will pay an additional 5billion euros to obtain energy this year due to the impact of energy sanctions on Russia. More than half of the extra 5billion euros will be earned by India and the United States. Because the United States is also buying energy from India, and then selling it to Europe in a different package at a higher price to earn the difference. It is called “produced in India”. In fact, where the crude oil comes from, everyone is dumb and eats dumplings — they know it well, but they are just confused.
In this way, although Russia did not get all the sales profits due to the sharp rise in energy prices, Europe has to pay the full price for the sharp rise in energy prices. I don’t know what Europeans think of such an embarrassing situation. Or they may think that this is the price that should be paid for the so-called values.