Page 9 - AsianOil Week 13

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border between Kazakhstan and Mongolia. Bei- jing was non-committal towards this plan, how- ever, because of the great distances required to transport gas from Xinjiang to demand centres in its industrialised south-east.
Instead, China has favoured the development of a pipeline through Mongolia, and serious talks began on the plan last year. According to Miller, this second pipe could flow up to 50 bcm per year of Russian gas. Power of Siberia carries gas from Eastern Siberia’s Chayandinskoye, but the Mongolian project will ship production from Gazprom’s fields on the Yamal Peninsula, in the Russian Arctic.
Gazprom has not disclosed any further details on the project, such as its length and preliminary budget. Before construction can go ahead, the company would first need to agree a supply contract with China. Gazprom’s $400bn deal to deliver gas to China via Power of Siberia was signed in 2014, having taken a decade to negotiate.
Russia and China are unlikely to get any- where in negotiating additional gas supplies until
markets stabilise. The coronavirus (COVID-19) pandemic has significantly dented Chinese gas demand, and caused global gas prices to sink to historic lows. Gas prices are anticipated to slide further this year as the recent oil price collapse feeds into oil-indexed gas supply contracts.
Russia had hoped to receive Chinese loans and other support for Power of Siberia, but in the end had to finance construction itself. This took a considerable toll on Gazprom – the pro- ject’s initial cost was estimated at around $55bn but is widely understood to have significantly exceeded this budget. It is likely that Russia would have to bear the cost of a second pipeline on its own as well.
The International Energy Agency (IEA) expects Chinese gas demand to almost triple by 2050, with domestic production failing to keep up with consumption growth. But while Chinese gas imports are set to increase significantly over the coming decades, there are numerous suppli- ers looking to fill the void, including Turkmeni- stan and various LNG exporters. This means stiff competition for Gazprom.™
OCEANIA
Australia’s 3D Oil secures work programme extension
PROJECTS & COMPANIES
AUSTRALIA’S offshore licensing body has granted 3D Oil a 21-month extension to its work programme in the WA-527-P crude oil play, which lies in the offshore Bedout sub-Basin.
The junior said on April 1 that the National Offshore Petroleum Titles Administrator (NOPTA) had given the company until Decem- ber 28, 2021 to acquire and process a minimum of 510 square km of 3D seismic data.
The permit lies around 80 km north-east of the Santos’ Dorado oil and condensate discovery, which is estimated to contain 448mn barrels of
oil equivalent (boe). Dorado is believed to be the third biggest oilfield in the greater North West Shelf and has been hailed as one of Australia’s most exciting discoveries in decades.
While 3D Oil did not say why it had sought an extension, the company is actively seeking a farm-out deal that will reduce its investment commitment and low oil prices will make that process more challenging.
Santos said in March that it would slash its budget for growth projects, which include Dorado, from AUD500mn ($305.5mn) to
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