On Monday, a landmark pipeline Power of Siberia, which will transport natural gas from Siberia to northeast China, was launched with Russian President Vladimir Putin and his Chinese counterpart Xi Jinping overseeing the event.
Xi told Putin that the gas pipeline is a landmark project of bilateral energy cooperation and an example of deep integration and mutually beneficial cooperation.
Likewise, Putin said, “This step takes Russo-Chinese strategic cooperation in energy to a qualitatively new level and brings us closer to fulfilling the task of taking bilateral trade to $200 billion by 2024.”
The Power of Siberia pipeline is 3,000 km (1,865 miles) long, set to transport gas from the Chayandinskoye and Kovytka fields in eastern Siberia. The pipeline emerges in Heilongjiang, which borders Russia, and goes onto Jilin and Liaoning.
By 2025, the gas flows via the pipeline are targeted to be 38 bcm/year, which will likely make China the second biggest gas buyer from Russia. The project will last for around three decades and is expected to generate USD400 billion for Russia. However, the price that China paid Russia for the gas pipeline is not disclosed.
The newly-launched Russian gas pipeline has gotten into an intense competition in China as China has already been supplied by other pipeline gas and sea-borne liquefied natural gas (LNG).
Russia has been talking with China about increasing gas sales via other routes too including from the Russian Far East and via Mongolia or Kazakhstan, but no agreement was reached.
Meanwhile, Jean-Baptiste Dubreuil, from the International Energy Agency (IEA)’s natural gas market analysis team estimated that China’s gas demand growth is expected to slow down from previous years yet remains strong. “We estimated 10% year-on-year growth for the first nine months of 2019,” said Dubreuil.
