Chinese state-owned energy groups continue to buy crude oil and natural gas from Russia, executives said this week, even as Western countries impose sanctions meant to cut off Moscow’s funding for its war on Ukraine.

PetroChina, the core listed subsidiary of China National Petroleum Corp. (CNPC), purchased 40 million tonnes of crude oil and 22.7 billion cubic meters of natural gas from Russia last year, PetroChina President Huang Yongzhang told reporters here Wednesday.

The purchase, Huang said, “followed and executed our long-term contract with our Russian partner.”

Huang likely was referring to a 30-year import agreement signed by CNPC and Russian gas producer Gazprom in May 2014, during President Vladimir Putin’s state visit to Beijing. The first flow of gas arrived in China in December 2019 through a new Siberian pipeline leading to China’s northeastern province of Heilongjiang.

The two sides agreed on the construction of a new gas pipeline in February 2022, just weeks before the Russian invasion of Ukraine.

CNPC also has an agreement with Russia’s largest state oil company, Rosneft, signed in February 2009, to receive crude for 20 years. A pipeline supplying East Siberia Pacific Ocean (ESPO) Blend to Heilongjiang started operating in 2011.

In the latest move, the two companies also agreed in February 2022 on a supply of 100 million tonnes via Kazakhstan over 10 years.

Huang acknowledged the “tremendous attention” on Chinese imports of Russian natural gas and oil. Last August, he avoided a similar question from Nikkei Asia on the sidelines of the company’s midterm results press conference. He referred the question to the public relations firm in charge of PetroChina’s media affairs, but no reply was given then.

Regarding which currency PetroChina used to pay for these imports, Huang said settlement was in accordance with the contracts. He declined to answer a question on the amount of yuan-denominated trade with Russia last year and its future direction.

China Petroleum & Chemical, or Sinopec Group, another state-owned oil group, has made spot purchases of Russian oil. Yu Baocai, president of Sinopec, the key listed unit of Sinopec Group, said on Monday that “we have procured some crude oil” when asked whether the company had bought any from Russia.

Yu said this was done to “diversify” sources and the amount was “extremely low” compared with the group’s overall procurement of crude. The use of yuan for settlement is also “very small,” he said.

Sinopec’s core subsidiary Sinopec Shanghai Petrochemical revealed earlier that it had purchased more than 500,000 tonnes of crude oil from Russia during the second half of last year.

Du Jun, vice president and chief financial officer, told reporters and analysts on March 21 that “we determine the place and type of crude oil procurement completely in accordance to price.”

For now, the company relies on the Middle East as its main source of crude, but “whenever the situation of the Middle Eastern oil is not ideal, we will go to other regions to obtain crude,” Du said.

In 2023, the proportion of crude oil purchases from the Middle East dropped by 6 points to 69.44%, while that from the Americas and Africa rose by 6 and 7 points, respectively, increasing to a total of around 25% of the entire procurement.

Du said in August that the company bought no crude from Russia during the first half of the year, but in the latter half, the mounting tensions in Gaza and the pursuit of cheaper oil pushed it to seek cheaper sources, as the company recorded two consecutive years of net losses.

China’s imports of Russian crude oil jumped to a record level in 2023, surpassing that from Saudi Arabia.

Meanwhile, the new natural gas project involving CNOOC, the core listed unit of state-owned China National Offshore Oil Corp., has been hitting a wall due to U.S. sanctions.

“Indeed, sanctions are imposed on some of our projects, and some of our projects are encountering challenges,” Xu Yugao, board secretary at CNOOC, told reporters last week about the state of the Arctic LNG-2 project in Siberia. Xu said the company has been in “close communications with its partners, in order to appropriately handle” the matter.

The project is led by Russian natural gas company Novatek, which owns a 60% stake, while CNOOC and CNPC each hold 10%. The remaining stakes are equally held by French energy group TotalEnergies and a Japanese consortium of Mitsui & Co. and Japan Organization for Metals and Energy Security, or JOGMEC.

Meanwhile, total investments by China’s three major listed state oil companies are set to fall for the first time in four years, amid declining revenue and uncertain economic prospects.

The aggregate capital expenditures forecast by PetroChina, Sinopec and CNOOC total between 556 billion and 566 billion yuan ($76.9 billion and $78.3 billion) for 2024. This is 3% to 4% short of last year’s level of 581.7 billion yuan. After hitting a recent low in 2020, the trio’s total capex had been rising on a push from China’s government under the pretext of energy security.

Despite lowering the annual investment target in 2024 by over 6% to 258 billion yuan, PetroChina Vice President Wan Jun stressed the planned level at this point is higher compared with the original plan in 2023.

“The actual execution of our capex is linked with actual workload of the company and changes in macroeconomic environment and other relevant conditions,” he said, hinting at a potential upswing if circumstances change.