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



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).





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



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 by Tomasz
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