SCO Taps into Regional Energy Potential with New Consortium

The Shanghai Cooperation Organization (SCO) is taking steps to strengthen its role in energy cooperation among member states, including Russia, China, and Iran. At the SCO summit held in Bishkek on September 1, energy ministers from member countries agreed to continue work on establishing an SCO Energy Consortium, a move aimed at improving regional infrastructure planning, energy security, and trade.

The consortium will assess existing pipeline capacity, hydroelectric potential, and natural gas resources within the region. Russia's shift towards Asia in oil exports is a significant development, with Europe's share of Russian crude oil and condensate exports falling from 51% in 2020 to 11% in the first half of 2025. China has become the main market for Russian oil, with deliveries through the Power of Siberia pipeline reaching 38.8 billion cubic meters in 2025.

Iran's energy resources are also being increasingly tapped by China, which purchased more than 80% of Iran's seaborne oil exports in 2025. However, Iran faces challenges in accessing international financing and technology to increase its energy exports. The SCO's energy agenda aims to address these gaps through coordinated regional infrastructure planning, storage capacity expansion, and strategic reserve management.

The consortium will also explore the use of national currencies in energy trade with China, as Western financial systems restrict access for Russia and Iran. While a common energy market or production quota mechanism is not feasible in the short term, the SCO Energy Consortium has the potential to become a more visible actor in energy markets and play a stronger role in coordinating Eurasia's energy infrastructure.