AIP121-S00 Recently, the war situation in Russia and Ukraine continues to be tense, and economic sanctions against Russia in Europe and the United States have been officially opened. No one likes war, which is accompanied by the loss of life and the tragic fate of a large number of ordinary people. Moreover, in the era of economic globalization, war will affect all walks of life in the world and bring about the Great Depression. Nevertheless, this article attempts to analyze what opportunities the “Russia-Ukraine conflict” may bring to Chinese companies from a commercial standpoint (the analysis is limited to the industrial and energy sectors).

The sanctions imposed on Russia by the world’s mainstream economies have given Chinese EPC the opportunity to lay out projects in Russia

According to ENR’s 2021 AIP121-S00 public information, among the world’s top 250 EPC (engineering general contractor), 78 Chinese companies are listed. Carefully analyze the overseas business of these 78 companies, most of which are concentrated in Southeast Asia, the Middle East, Africa and other regions, as shown in the table below.

AIP121-S00

AIP121-S00 Recently, as the situation in Russia and Ukraine has deteriorated faster than expected, the United States, the United Kingdom, Germany, Canada, Japan, Australia, New Zealand, South Korea and other countries have announced sanctions against Russia. It involves financial, military, and technological issues, including cutting Russia off from SWIFT (Belgian-based SWIFT is connected to more than 10,000 banks and transmits data through it for half of the world’s major cross-border transfers), banning the export, sale or supply of any goods, services or technology, halting important projects, and sanctioning important people. Sanctions will seriously affect the progress of these countries’ EPC projects in Russia, as well as future project cooperation planning, which will benefit China’s EPC project layout in Russia.

The next question is, which Chinese EPCs have already opened the market in Russia?

According to data released by China’s Ministry of Commerce, the trade volume of goods between China and Russia in 2021 reached 146.87 billion U.S. dollars, an increase of 35.9 percent year-on-year, and China has been Russia’s largest import and export partner for 12 consecutive years. In recent years, the project cooperation between China and Russia has become more and more frequent, mainly concentrated in the power, chemical, petrochemical, steel, AIP121-S00 transportation and other industries. China Energy Construction, China Railway Construction, China Chemical and other group companies have successively participated in the construction of a number of key projects in Russia.

Chinese EPC projects in Russia – Part

Moreover, as a result of the sanctions, many countries such as Europe and the United States are bound to reduce their imports of oil and gas from Russia and increase their imports of energy from other countries in the world (the Middle East, South America and other regions). It is certain that in the future, there will be a large number of related new construction projects in the Middle East and South America (especially Venezuela), and Chinese EPC has existing advantages in these regions and countries. A significant proportion of engineering orders will go to Chinese EPCs.