Russian-Chinese energy cooperation

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Gazprom pump up China- Monopoly plans to increase gas supplies to 130 billion cubic meters per year

https://www.kommersant.ru/doc/4396352 Коммерсантъ"  26.06.2020, 17:58

Future gas projects connecting Russia with China over the next 10 years

Currently build Power of Syberia I - planned expanded capacity to 44 bilion cubic meters

Planned pipeline in Far East 10 bilion cubic meters

Planned Altai Pipeline through Mongolia  (former PoS II ) 40 bilion cubic meters

Planned New Western Power of Syberia II - 50 bilion cubic meters

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Gazprom is making plans to increase expansion in the Chinese market. So, the monopoly, which has been supplying gas to China through the Power of Siberia gas pipeline since late 2019, is in talks to increase supplies by 6 billion cubic meters, up to 44 billion cubic meters of gas per year, the head of Gazprom Alexei Miller said. The company also intends to organize gas supplies from the Far East, build the “Power of Siberia-2” and the “western route” through Altai, bringing the volume to 130 billion cubic meters per year.

Gazprom is discussing with China the possibility of increasing gas supplies through the Power of Siberia by 6 billion cubic meters per year, up to 44 billion cubic meters per year, the head of the monopoly, Alexey Miller, said at the annual general meeting of shareholders held on June 26. He noted that China’s demand for gas will grow rapidly.Last year, gas consumption in China increased by almost 10% and exceeded 300 billion cubic meters. In 15 years, gas demand in the country may double, ”said Mr. Miller.

Given the work on new gas supply routes to China - the Far East (about 10 billion cubic meters), the “Power of Siberia-2”, which is supposed to pass through the territory of Mongolia (50 billion cubic meters per year), and the “western” Altai route (directly from Russia to the western part of China, 30 billion cubic meters) - Gazprom intends to export over 130 billion cubic meters of gas a year to China in the foreseeable future, said Alexey Miller. Until now, the transit route through Mongolia was considered an alternative to the technically more complex, but shorter route through Altai. But it follows from Mr. Miller's words that Gazprom has not refused this option.

Moreover, according to the head of the Russian monopoly, Gazprom has a "greater margin of safety" than competitors in the European gas market, which is experiencing a deep crisis since the beginning of the year. According to him, this is ensured by a rich resource base, a balanced trading portfolio, flexible delivery conditions and modern trading tools.

Alexey Miller estimated the liquidity reserve for the group at more than $ 22 billion. At the same time, China is one of the three largest importers of LNG. According to the IEA forecast , the volume of global LNG trade in 2025 will reach 585 billion cubic meters, of which China will import up to 128 billion cubic meters due to an increase in regasification capacities. According to the International LNG Importers Group (GIIGNL), China's total LNG imports in 2019 increased by 14%, to 61.7 million tons (17.4% of world imports).

 

 

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Jun 26 - PRIME. Gazprom is still discussing with China an increase in gas supplies through the Power of Siberia gas pipeline by 6 billion cubic meters, up to 44 billion cubic meters per year, and is also agreeing on gas supplies from the Far East, the construction of Power of Siberia 2 and the Western route , said the head of the company Alexey Miller.

"At the same time, on our negotiating table with our Chinese partners - increasing gas supplies via the Power of Siberia gas pipeline by 6 billion cubic meters to 44 billion cubic meters of gas a year, organizing gas supplies from the Far East, building Power of Siberia 2 and the West route, "Miller said in an interview published on Gazprom’s official website.

"Together, this makes it possible to talk about exporting pipeline gas to China in the foreseeable future in the amount of over 130 billion cubic meters, which is comparable to our current supplies to traditional markets," he said in an interview published on the official website of Gazprom.

Gazprom and Chinese CNPC signed an agreement on gas supplies to China along the eastern route in May 2014. It has been concluded for 30 years and envisages an annual supply of 38 billion cubic meters of Russian gas to China. Deliveries via the Power of Siberia gas pipeline began in early December 2019 along the section from the Chayandinskoye field in Yakutia to Blagoveshchensk (border with China). At the second stage, it is planned to launch the site from the Kovykta field to Chayanda.

Alexei Miller reported last June that Gazprom was discussing with China the supply of an additional 6 billion cubic meters of gas per year through the Power of Siberia gas pipeline.

 

 

 

The better the worse Alexander Gabuev on the impact of China's anti-crisis program on the Russian fuel and energy complex

https://www.kommersant.ru/doc/4366233?from=doc_vrez

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The newspaper "Kommersant" №99 from06/05/2020 page 5

China has approved an economic support program that should help the country overcome the crisis caused by the pandemic. At the session of the All-China Assembly of People's Representatives, the highest legislative body of the People’s Republic of China, which ended on May 29, a package of measures worth 6 trillion yuan (almost $ 840 billion) was approved.

The amount looks astronomical, but by Chinese standards is rather modest and rather demonstrates caution. Given the unpredictability of both the epidemiological and economic conditions for at least the coming year, the authorities are in no hurry to flood the economy with money. They learned this lesson from the crisis of 2008-2009, when the $ 600 billion spent on infrastructure turned into not only new bridges and airports, but also a triumph of cuts, as well as bad debts on the balance sheets of state banks and local governments.

Two-thirds of the anti-crisis package are measures to support small and medium-sized businesses, which in China provide almost 70% of employment. To do this, Beijing will spend 4 trillion yuan (almost $ 560 billion) on tax credits, subsidies on credit rates and tariffs of natural monopolies. The remaining money will go to infrastructure. Although the State Council of China for the first time refused to declare a goal for GDP growth, informally Beijing is guided by economic growth of 2% - which will be a success against the backdrop of a recession throughout the rest of the world.

For Russia, fast recovery and growth in China is one of the few good news. Especially for oil industry workers, who, despite the decline in production under the OPEC + deal, have increased oil exports to China by almost 20% and have been ahead of Saudi Arabia in terms of the Chinese market share for two months now. Construction projects, which will once again become the locomotive of China’s recovery from the crisis, will support demand for heavy oil products, while the restoration of the car market will support demand for gasoline.

But over a longer horizon, China’s anti-crisis plan should make oil workers wary. The fact is that most of the construction costs will go not to roads and bridges, but to a “new type of infrastructure”, which Beijing means 5G networks, data centers, high-speed railways for urban agglomerations, as well as a national charging network for electric vehicles. China is keen to take advantage of the crisis to build the infrastructure for the transition to Industrial Revolution 4.0. Until 2025, China will spend $ 1.4 trillion on these goals.

One of the tasks - future economic growth should become much more “green”, and ultimately, oil demand in China may begin to decline. But Gazprom will benefit: the new infrastructure will require more electricity, and the project of the Power of Siberia-2 gas pipeline, which was recently announced in the monopoly, can be quite timely.

 

 

Edited June 27, 2020 by Tomasz

[Tomasz + 1,608]

 

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China has brought the middle section of the China-Russia East natural gas pipeline into operation. It is connected to the Power of Siberia gas pipeline from Russia that will deliver blue fuel to northern China.

According to the state-run China Oil & Gas Piping Network Corp (PipeChina), the 1,110km section of the pipeline will stimulate the development of the Beijing-Tianjin-Hebei region, the country’s main manufacturing area, by increasing gas supply by 27 million cubic meters per day.

The new section starts at Changling city in Jilin and stretches to Yongqing city in Hebei, connecting the existing gas pipelines in the northeastern and northern parts of the country, as well as the gas storage projects in Dalian, Tangshan and Liaohe.

The new route will also reportedly help to improve air quality in the region, where a quarter of China’s steelmaking capacity is located.

The northern part of the international gas route was launched in December 2019, and so far has transmitted around four billion cubic meters of natural gas, PipeChina says.

China started the construction of the southern section of the China-Russia East pipeline in July, extending the route to Shanghai in eastern China. The pipeline is projected to reach an annual capacity of 38 billion cubic meters when it is completed in 2025.

 

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Gazprom's gas deliveries to China via the Power of Siberia pipeline on December 28 exceeded daily contractual obligations by 59.7%, and on December 31 will exceed the contract by 80.6%, the company said.

Gazprom continues to increase gas exports to China via the Power of Siberia gas pipeline from the Chayandinskoye field, ”the release said.

"So, on December 28, gas supplies to China are provided in volumes 59.7% higher than the daily contractual obligations, and on December 29-31, supplies will exceed contractual obligations by 66.7%, 73.6% and 80.6%, respectively." , - indicates "Gazprom".

 

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Russia’s leading petrochemicals company and one of the most rapidly growing petrochemicals businesses globally Sibur Holding, and China Petroleum & Chemical Corporation (Sinopec), China’s leading energy and chemical company, have closed a $11bn deal to set up a joint venture at the Amur Gas Chemical Complex (Amur GCC) after obtaining all the necessary approvals from the regulators of both countries, Sibur announced in a press release on December 28.

The long discussed project has been in the works for years and follows on from the completion of the ZapSibNeftekhim petrochemical complex (ZapSib) in 2020, another major expansion of the company’s production capacity that was profiled by bne IntelliNews in ““Plastics in the snow” in 2018.

Sibur and Sinopec signed off on a provisional agreement to build the Amur Gas Chemical complex in June 2019, as bne IntelliNews  reported at the time at a signing ceremony attended by President of the People's Republic of China Xi Jinping and Russian President Vladimir Putin at the St Petersburg International Economic Forum (SPIEF) investment forum.

“The partnership will allow the parties to tap into shared expertise and experience to maximise efficiency of new large-scale projects and to exchange best practices”, said Dmitry Konov, Chairman of the Management Board at Sibur Holding said at that ceremony

Under the terms of the final agreement Sibur and Sinopec will hold 60% and 40%, respectively in the Amur GCC joint venture, the company said.

The main terms and conditions of the potential joint venture were agreed in 2019 that began the process to get all corporate and regulatory approvals required to close the deal, a process that has now been completed. Following the deal, the parties will gain joint control over Amur GCC.

Set to become the world’s largest basic polymer production facility, Amur GCC will have a capacity of 2.7mn tonnes per annum, including 2.3mtpa of polyethylene and 400ktpa of polypropylene, and will be producing a wide range of grades.

The construction of Amur GCC proceeds in sync with the gradual ramp-up of Gazprom’s Amur Gas Processing Plant to its full capacity, so that the latter could supply ethane and liquefied petroleum gas (LPG) to Amur GCC for processing into high value-added products. The completion of construction and commissioning is scheduled for 2024. The creation of Amur GCC is part of Sibur’s strategy to move up the value chain and produce more valuable hydrocarbon products from the feedstock supplied by Russia’s major oil and gas producers.

“The Amur GCC project will help attract international investments in the Russian economy while also making a considerable contribution to the national programme of growing the nation’s non-commodity exports. Given the facility’s geography, its products will be targeting Asian markets, primarily China, which is the largest consumer of polymers globally. The Amur GCC project is expected to be included in an intergovernmental agreement between Russia and China,” the company said in its press release.

In keeping with the ongoing move towards environmental, social and governance (ESG) compliant production, Sibur stressed the project would follow the highest global environmental and technology standards, in particular through its reliance on renewable energy sources.

Amur GCC’s construction budget is tentatively estimated at $10bn to $11bn and is subject to adjustments as the project progresses. In December, Amur GCC attracted $1.5bn in bridge financing from a syndicate of Russian banks. Gazprombank acted as the lead arranger and lender, with Otkritie and Sberbank as arrangers and lenders.

Dmitry Konov, Chairman of the Management Board at Sibur Holding said: “Sibur and Sinopec have a long track record of jointly delivering on large-scale investment projects and implementing advanced production technologies. Creating a joint venture is a major milestone in our Amur GCC project. With Sinopec’s involvement, we will be able to maximise the project’s efficiency, in particular optimising and balancing the facility's future debt portfolio, while also enhancing its expertise in distribution across Asian markets.”

Zhang Yuzhuo, Chairman of Sinopec, added: “Amur GCC is a milestone in the cooperation between Sinopec and Sibur, and will also become a model for Sino-Russian energy cooperation to extend to the downstream chemical industry. The success of Amur GCC will inject new impetus into advancing the high-quality cooperation between the two countries in the fields of energy, chemical industry, investment, economy and trade and play a positive role in effectively promoting the sound interaction of domestic and international markets as well as the economic development, employment and social well-being of the Far East region.”

 

Some news about sino-russian cooperation in energy projects - Power of Syberia and Amur Gas Chemical Complex (Amur GCC)