Impact of Russia-Ukraine Conflict on Energy Supply in Asia

Zhong Yu, Zhang Xuexi & Li Heng

Asia consists of 49 UN Member States, 6 unrecognized countries, and 6 territories. The top ten economies in the world; China, Japan, and India are included in this region.

It is predicted that before 2050, Asia will become the largest energy consumption base in the world. Since the Russian-Ukrainian conflict broke out in late February 2022, the global energy price has been rising, and the world energy pattern has undergone earth-shaking changes.

For most countries and regions in Asia, for example, countries like China, the background of the Russian-Ukrainian conflict makes them face both new opportunities and new challenges.

On the one hand, the conflict between Russia and Ukraine plunged Europe into an energy crisis, while its adverse effects, such as the shortage of natural gas, led to the rapid development of alternative energy sources such as photovoltaics and heat pumps in China.

According to the “EU Energy Restart” plan published by the European Union (EU), the EU’s key directions in the field of new energy are photovoltaic and wind power, however, China is a strong leader in these fields.

According to the data of the China Photovoltaic Industry Association, in the first half of 2022, the total export of photovoltaic products in China was about 25.9 billion USD, up by 113% year on year.

As the largest exporter of photovoltaic products in the world, China undoubtedly provides a good opportunity for its alternative energy field.

On the other hand, the Russian-Ukrainian conflict deepened Sino-Russian cooperation in a certain sense and enhanced China’s natural gas reserve supply capacity.

China’s natural gas self-sufficiency rate is less than 60%, and about 40% of its natural gas imports come from Australia. The global competition for natural gas imports has become more intense due to the conflict between Russia and Ukraine.

After the energy exchange between Russia and European and American countries, Russia is in urgent need of economic assistance from the Chinese market.

China will increase its natural gas imports to Russia, get rid of the restriction of a single source of natural gas, and consolidate its friendly economic and trade relations with Russia.

At the same time, China is also facing enormous risks and challenges, such as the stability and price of oil and gas supply in China may fluctuate greatly, how to carry out energy cooperation between China and Russia and other high-energy countries and regions under the double risks of global inflation and COVID-19’s epidemic prevention, how to effectively cope with the world’s energy restructuring to promote its green transformation, and so on.

Furthermore, India and Russia had a certain basis for cooperation in the energy field before the outbreak of the Russia-Ukraine conflict, but the two countries were far apart and separated by China, Pakistan, and other countries.

If large-scale cooperation was carried out, it would inevitably involve India-China as well as India-Pakistan relations and other issues.

Therefore, energy cooperation between the two countries has been trapped in a dilemma of cooperation basis but a weak foundation.

On the contrary, the Russian-Ukrainian conflict and the change in the world energy structure have promoted the pace of energy cooperation between India and Russia to a certain extent.

Russia will naturally increase its energy investment in India’s Asian region and expand its energy sales because Russia’s energy exports to Europe dropped sharply during the Russian-Ukrainian conflict.

However, this expansion is aimed at the whole Asia-Pacific region, and the specific cooperation intensity still varies from country to country.

India is an important country in Asia and has maintained a “neutral” attitude on the conflict between Russia and Ukraine, and India-Russia relations have enhanced because of India’s massive oil imports from Russia.

However, the pressure exerted by the United States and the West on India will inevitably affect India-Europe energy cooperation to a certain extent.

In the future, India will either resist Western pressure or deepen India-Russia cooperation. Likewise, it will either pose as a weak man, actively seek peace with the West, and reduce or interrupt India-Russia cooperation.

From the fact that Putin and Modi held bilateral talks to discuss in-depth cooperation in energy and other fields on the sidelines of the SCO summit in Samarkand in September 2022, it can be seen that India may compromise on two options in the follow-up: resist pressure, please both sides and strengthen cooperation with Russia.

Throughout the world, since the outbreak of the Russian-Ukrainian conflict, the United States and Europe have launched round after round of sanctions against Russia.

Except for a few countries such as Japan and South Korea, few countries in the whole Asian region have followed the US and Europe in “taking sides.”

Take Japan as an example from Asia. Although Japan has followed the pace of the United States in imposing sanctions on Russia, it has always been “slow.”

This is because Russia is not only a permanent member of the UN Security Council but also a nuclear power with super military strength hence the Japanese deliberateness.

Almost all of Japan’s energy depends on overseas imports, and the conflict between Russia and Ukraine makes its energy supply problem more and more serious.

For example, ordinary households and enterprises in Japan must save electricity from December 1st this winter to the end of March next year to ease the shortage of electricity.

If Japan does not continue to buy oil and gas from Russia, Japan will not be able to “survive.” Moreover, except for these pro-American countries, most Asian countries and regions still maintain a “neutral” position in the Russian-Ukrainian conflict.

Like Russia, these countries will face constant pressure from the developed Western countries led by the United States.

For example, Pakistan, although it has the same position as China and India, it does not have as rich treasury funds as China and India.

As the Russian-Ukrainian conflict raised the price of natural gas in the international market, Pakistan had to face a series of direct or derivative crises, such as power failure and insufficient supply of natural gas.

Presently, against the background of European and American countries’ all-out efforts to crack down on Russia, Pakistan is trying to buy low-priced oil in Russia and actively cooperate with Russia in energy to alleviate its energy crisis. The US-Pakistan relationship is about to face the second deterioration after the Afghanistan war.

Since the Russian-Ukrainian conflict, based on the deep-rooted zero-sum thinking of the Cold War and the idea of bloc confrontation, the United States has wooed Europe, resorted to coercion and inducements, and undermined world peace and stability to consolidate American hegemony.

In response to the United States, Asian countries should constantly explore cooperation space with Russia and other energy powers, insist on the innovation of energy sources, deepen their trade with European countries, and diversify their energy markets.

Finally, the relationship between development and security to realize the normalization of energy security should be coordinated.

Besides, Asian countries should also strengthen multi-faceted and multi-level cooperation in various fields, such as vigorously building the “China-Pakistan Economic Corridor” and further promoting the “Belt and Road Initiative” initiative, etc. so as to form a harmonious and mutual assistance situation among Asian countries in various fields, and jointly contribute to the integration of Asian energy markets.

Individual countries, such as Japan and South Korea, should give up the bottomless pace of following the United States, jump out of the strange circle of the “dream of Nanke” in the United States, and break away from one fantasy after another laid by the United States at an early date.

In the future, if Asian countries and regions don’t strengthen communication and coordination with each other, and form a joint force in Asia, the whole Asian region may become a political manipulation tool of the United States under the background of the Russia-Ukraine conflict, and it will suffer multi-dimensional devastating blows not only in energy but also in military, economic, scientific and technological fields.

*The writers are Scholars at Baize Institute for Strategy Studies, Southwest University of Political Science and Law, P. R. China