Page 6 - AsianOil Week 43 2021

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Russian plans for second

gas pipe to China take shape

The two countries are closer than ever to a deal on a second
gas pipeline, but certain obstacles still need to be overcome

COMMENTARY RUSSIA is shoring up plans to build a second As such, a second pipeline delivering some of
natural gas pipeline to China, after reaching an this supply to Chinese buyers could take some of
agreement “in principle” on its route with Bei- the sting out of such a threat.
WHAT: jing. But it could still take many years for the pair
Moscow and Beijing have to strike a supply deal to underpin the project, Supply start-up
reached an “in principle” which is set to cost tens of billions of dollars to Russia began piping gas to China in December
agreement on the new realise. 2019, when Power of Siberia came on stream.
pipeline’s route. Russian President Vladimir Putin announced At full capacity, the pipeline is set to flow 38bn
at a conference on October 14 that Russia and cubic metres per year of gas, though Gazprom
WHY: China had agreed to run the pipeline through has said it does not expect that level of supply to
China is worried about Mongolia – an option that was first mooted be reached until 2025.
gas supplies, while around two years ago. While the existing Power Nevertheless, deliveries could ramp up
Russia wants to diversify of Siberia pipeline carries gas from fields in East- faster as Chinese gas demand picks up amid
its customer base. ern Siberia to the Chinese gas market, this sec- the post-coronavirus (COVID-19) economic
ond pipeline, known as Soyuz Vostok, will tap rebound.
WHAT NEXT: large reserves on the remote Yamal Peninsula in China’s imports of piped gas climbed to a
High international spot the Russian Arctic. record 3.87mn tonnes in September, according
gas prices give Russia The Russian government sees expanded gas to General Administration of Customs (GAC)
the edge in negotiating sales to China as a strategic priority. It wants to data published on October 21. The figure was
prices with China. offset its overreliance on European gas demand, 2.2% higher than August’s 3.79mn tonnes.
which despite seeing a strong rebound this year, Imports of liquefied natural gas (LNG), mean-
is projected to see long-term decline as Europe while, rose by 1.5% month on month to 6.75mn
shifts towards cleaner forms of energy than gas. tonnes.
EU politicians are also growing increasingly Beijing’s pledge to hit peak carbon emissions
antipathetic towards Russian gas supply. Accusa- by 2030 and achieve carbon neutrality by 2060 is
tions that Russia is using the fuel as a geopolitical also expected to necessitate the closure of many
weapon are nothing new. But Gazprom has been of the country’s coal-fired power plants in the
criticised heavily for exacerbating the current years ahead, creating further long-term demand
crisis by withholding some supply. for cleaner-burning gas.
The European Commission has blamed the While Chinese officials pushed miners in the
bloc’s overreliance on gas imports, and has also country’s two leading coal regions – Inner Mon-
proposed a ban on member states buying gas golia and Shanxi – to boost their production
that is produced in the Arctic, which would affect earlier this month, the reality is that any surge
many of Russia’s largest undeveloped fields. in coal demand is a short-term prospect at best.

P6 www. NEWSBASE .com Week 43 28•October•2021