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Power of Siberia 2 construction

to begin in 2024, says Mongolia

PIPELINES & MONGOLIAN Prime Minister Oyun-Erdene produced on the Yamal Peninsula through Mon-
TRANSPORT Luvsannamsrai has said he expects construction golia to China. But the project’s cost is certain to
of the Power of Siberia 2 gas pipeline to begin in run into the tens of billions of dollars, and Russia
the landlocked country in 2024, and for gas flow is yet to reach a gas supply deal to underpin this
to start in 2030. investment.
Moscow is scrambling to develop alternative It took over a decade for Russia to clinch a
export routes for its substantial gas reserves, as deal with China for gas supply via the Power of
Europe, its largest market, pushes to eliminate Siberia 1 pipeline, which it finally did in 2014.
Russian gas imports. While Russia has added Beijing is likely to drive a hard bargain, as it has
cause to accelerate talks on Power of Siberia 2, access to a number of alternative sources of gas
the country may also struggle with financing supply, and may seek to take advantage of Rus-
and implementation as a result of the economic sia’s desperation to find new markets. The Chi-
malaise caused by Western sanctions. nese government may also be uncomfortable
Russia and China have already finished a fea- about relying too much on Russia for gas sup-
sibility study for the 2,600-km pipeline, although ply, especially considering Russia has tarnished
they are still to decide with Mongolia on a final its image as a reliable gas supplier after cutting
route. deliveries to a number of customers in Europe
“The feasibility study of this project has fin- since the war broke out in Ukraine.
ished and we believe construction will begin in And while talks with Moscow drag on,
2024,” Luvsannamsrai told the Financial Times Chinese gas importers have signed a number
in an interview on July 18. He added that Mos- of gas deals in recent months with US LNG
cow had not put pressure on Ulaanbaatar to exporters. And the longer negotiations go on
accelerate construction. without progress, the less market share Russia
At full capacity, Power of Siberia 2 is expected will be able to secure in the fastest-growing
to pump up to 50bn cubic metres per year of gas gas market.™

P12 www. NEWSBASE .com Week 29 22•July•2022