Page 6 - RusRPTDec19
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2.0 Politics
2.1 Gazprom launches Power of Siberia pipeline to China
Russia’s Gazprom flagship Power of Siberia gas pipeline mega-project that connects Russia’s Siberian gas fields with China came online on December 2, after the investment of billions of dollars that will earn the company billions more with delivery of gas to China each year.
The 3,000-km pipeline will carry gas from the Chayandinskoye and Kovytkinskoye fields in Eastern Siberia over at least three decades, flowing 38bn cubic metres of gas each year when it reaches maximum capacity.
“This is a genuinely historical event not only for the global energy market but above all for us, for Russia and China,” said Russian President Vladimir Putin, who watched the launch via video link from Sochi. “This step takes Russo-Chinese strategic cooperation in energy to a qualitative new level and brings us closer to [fulfilling] the task, set together with Chinese leader Xi Jinping, of taking bilateral trade to $200 billion by 2024.”
Russia relies on Europe for the vast bulk of its gas exports, with volumes totalling just under 200bcm annually. But in recent years it has struggled with flat demand for gas on the continent as well as rising competition from LNG.
Gazprom was stung by a 45% drop in net profits in the third quarter, blaming the decline on lower exports to Europe and weaker prices. Power of Siberia will help diversify the company’s revenue base by opening a route for large-scale shipments to China, the world’s biggest gas importer.
There is a clear economic rationale for Russia to connect its sizeable gas resources with China’s burgeoning gas market. Russia has almost 39 trillion cubic metres in proven gas, according to BP data, but it has struggled to develop resources in its east because of a lack of export options.
6 RUSSIA Country Report December 2019 www.intellinews.com
