Page 9 - FSUOGM Week 49 2019

FSUOGM PIPELINES & TRANSPORT FSUOGM
Gazprom to study Mongolian pipeline
Russia’s first gas pipeline to China, Power of Siberia. Source: Gazprom.
RUSSIA
The plan now appears to be gaining traction.
RUSSIA’S Gazprom plans to undertake a study on the construction of a gas pipeline through Mongolia to China, it revealed last week.
On December 2, the state gas exporter hailed the launch of the 38bn cubic metre per year Power of Siberia – the first ever gas pipe- line between Russia and China. Shipments are expected to slowly work up to full capacity by 2025. But in the meantime, Gazprom is devising a plan to reach Chinese consumers via Mongolia.
Gazprom head Alexei Miller signed a mem- orandum of understanding (MoU) on Decem- ber 5 with Mongolian Deputy PM Ulziisaikhan Enkhtuvshin on a joint feasibility assessment of the project. The document was signed following talks between Russian and Mongolian officials in Moscow and then Sochi.
“We are pleased that Russia supports the pro- ject to build a gas pipeline from Russia to China across Mongolia,” Mongolian PM Ukhnaagiin Khurelsukh said on December 3 in a meeting with Russian counterpart Dmitry Medvedev, according to a message on the Russian govern- ment’s website. “I believe this project has been effectively launched today.”
China and Russia have held on-and-off dis- cussions on developing a gas route through Mongolia for years, without the plan making much progress. But the project now appears to be finally gaining traction. In September, Russian President Vladimir Putin ordered Gazprom’s
Miller to evaluate options for its construction, noting that the plan enjoyed support from Beijing.
Russia’s original preference for a pipeline to China was via its southern Altai region, where the two countries share a border of less than 100 km in between eastern Kazakhstan and west- ern Mongolia. China instead backed an eastern route, which became Power of Siberia, agreeing a $400bn, 30-year gas supply deal with Russia in 2014 to underpin its development.
Russia likely would still favour the Altai route to a Mongolian channel, given its shorter length to the Chinese border. But Beijing is cold on the idea, given the thousands of kilometres of pipe- line it would need to build to pump gas from its northwestern regions to demand centres in its east.
In any case, Gazprom would be able to use spare production capacity in Western Siberia to fill either the Altai or the Mongolian pipeline. This capacity is at fields which primary supply the European market. In contrast, Gazprom had to develop completely new fields in Eastern Siberia to provide the gas for Power of Siberia, driving up costs.
One of the main disadvantages of a Mongo- lian route, as far as Russia is concerned, is tran- sit risks. Gazprom is well aware of the problems that can arise from relying on a third country to transit its gas from its experience in Ukraine.™
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