Russia has been ramping up oil exports to Asia since its invasion of Ukraine led to Western sanctions on imports of Russian oil. Some of the crude and products going to Asia are being transferred from one vessel to another in international waters around Europe, including outside UK territorial waters.

A couple of months after Russia’s invasion of Ukraine, President Vladimir Putin gave a press conference on the status of Russia’s oil and gas sector. During the speech, he told his ministers that in order to protect the country from the actions of “unfriendly states” Russia would “need to draw up plans with oil and gas companies for expanding the export infrastructure to countries in Africa, Latin America and the Asia-Pacific region”. The move followed announcements from Europe, the UK and the US that they would curtail and eventually stop imports of Russian fossil fuels.

Despite Russia’s claims, however, rewiring a country’s entire oil and gas system is not a task that can be carried out overnight. Its oil and gas both require pipelines to be transported from Europe to Asia. The oil is more fungible, as it can be moved on ships, gas represents a bigger challenge as it heavily depends on pipelines. Out of the three global regions cited by Putin in his press conference, Asia-Pacific is the only option Russia can realistically turn to. Latin America is too far away and, while it could bridge the gap for oil, Africa does not have any infrastructure to receive natural gas from Russia even if new pipelines were built.

In 2021, Russia sold about 33 billion cubic metres (bcm) of gas to Asia, compared with a European market that typically imports 160 to 200bcm from Russia. According to the Center for Strategic and International Studies (CSIS), two-thirds of the gas Russia sends to Asia comes in the form of liquefied natural gas (LNG). Of this, 14bcm has come from the Sakhalin-2 project, going to Japan, South Korea, Taiwan and China, and 8.5bcm from Yamal LNG, serving mostly China, but also Japan, South Korea, Taiwan and India, with smaller volumes going to Bangladesh, Indonesia and Singapore. Russia also delivered 10bcm to China through the Power of Siberia pipeline, which was launched in late 2019 and will eventually flow 38bcm a year. None of that comes even close to making up for the 160 to 200bcm of gas Russia exports to Europe every year. New pipelines to Asia will have to be built in order to equate the volumes of oil and gas that are sold to Europe.

Russia is also the world’s third largest oil producer behind the US and Saudi Arabia, with 11.3 million b/d produced in January 2022, of which 10 million b/d was crude oil, 960,000 b/d condensates and 340,000 b/d natural gas liquids. About 60% of Russia’s oil exports go to European countries that are members of the OECD, and another 20% go to China, according to the IEA. Russian oil is transported either through pipelines or via seaborne routes, on ships. For this reason, it is more fungible and easier to redirect than gas. Russia has the two longest oil pipelines in the world, the Druzhba (which means “friendship”) to the west, and the Eastern Siberia-Pacific Ocean oil pipeline to the east. Compared with gas, the oil export situation is less of a problem for Russia to handle as Europe tries to wean itself. Because the oil market is so fungible, it is much more difficult to interrupt exports, and while production will go down, it will not collapse completely.

Russia found Asia as an alternative market. As it is in talks with several Asian nations for potential long-term oil contracts with steep discounts. The discounts could be as much as 30%, and may signify that Moscow is looking to counter sanctions on it by the US and Group of Seven nations. It may also reflect a push to secure more buyers as Europe shuns its supplies. At this moment, the consistency and reliability of Asian buyers of Russian oil, LNG, and coal are the most important element allowing Moscow strategic space against the Western mobilisation. Energy was a central topic during the last SCO Summit in Samarkand. Putin pledged to assist other SCO members in dealing with “energy and food problems.”

India, China and other Asian nations are becoming an increasingly vital source of oil revenues for Moscow despite strong pressure from the U.S. not to increase their purchases, as the European Union and other allies cut off energy imports from Russia in line with sanctions over its war on Ukraine. Such sales are boosting Russian export revenues at a time when Washington and allies are trying to limit financial flows supporting Moscow’s war effort.

Chinese customs data showed that crude oil imports from Russia soared 55 percent in May, compared with a year earlier, hitting a record level and displacing Saudi Arabia as China’s top supplier. It imported about 8.42 million tonnes of oil from Russia last month. Whereas, it imported 7.82 million tonnes of oil from Saudi Arabia in the same period. While, Russia became India’s main supplier, providing it with 946,000 bpd. The Sri Lanka, Philippines and Indonesia are in pipeline to buy cheaper Russian oil.

A report by the Helsinki, Finland-based Centre for Research on Energy and Clean Air, an independent think tank said Russia earned 93 billion euros ($97.4 billion) in revenue from fossil fuel exports in the first 100 days of the country’s invasion of Ukraine. The data, which shows that Russia took back the top ranking of suppliers to the world’s biggest crude oil importer after a gap of 19 months, indicates that Moscow is able to find buyers for its oil despite Western sanctions, though it has had to slash prices to do so.

The emergence of geo-political competition always brings the opportunities as well. The path might be arduous to grab the opportunity but whoever avails it becomes the beneficiary. Both the China and India are an example of it. Pakistan should make tough decisions to grab the opportunities in such scenario where SCO platform can play a better role in it.