Chinese state-owned oil major Sinopec has hit the brakes on its investment plans in Russia as firms assess the impact of the severe Western sanctions on their investments, a media report said. Sinopec which is Asia’s biggest oil refiner moved to stop major investments in a gas chemical plant and a venture to market Russian gas in China in the wake of unexpectedly heavy Western-led sanctions against Moscow, The Standard Hong Kong reported. Since Russia invaded Ukraine more than a month ago, China’s three state energy giants – Sinopec, PetroChina and CNOOC – have been assessing the impact of the sanctions on their multi-billion dollar investments in Russia, the report said. “Companies will rigidly follow Beijing’s foreign policy in this crisis,” said an executive at a state oil company, adding, “There’s no room whatsoever for companies to take any initiatives in terms of new investment (in Russia).”
The Ministry of Foreign Affairs of China is said to have summoned officials from the three energy companies this month to tell them to review their business ties with Russian partners.
There was a caution from the ministry that the firms should avoid “rash moves” in buying Russian assets. The report comes after Sinopec’s net profit last year more than doubled in 2020 to 71.2 billion yuan (HKD 87.6 billion), the most in a decade. The restraint diktat issued by the Chinese Communist Party (CCP) is expected to impact the long-term profitability of the oil major. China has in recent weeks coldly buried its friendship with Russia deep in the tundra with its Foreign Minister Wang Yi telling his Spanish counterpart, “China is not a party to the (Ukraine) crisis, and does not want the sanctions to affect China.” Meanwhile, the humanitarian crisis in Ukraine continues to deteriorate even as the conflict that began on February 24 with the Russian announcement of “special military operations” has entered its second month. The ongoing conflict has resulted in about 10 million people getting displaced within the country or ending up as refugees abroad till now according to the United Nations High Commissioner for Refugees (UNHCR). More than 3.5 million refugees have fled to the neighbouring western countries, including Poland, Romania, Moldova and Hungary, with European Union President Ursula von der Leyen on Wednesday announcing an economic package of EUR 3.4 billion to support EU countries hosting those fleeing the war.