China’s LNG import growth is expected to slow further due to additional natural gas from Russia following the anticipated startup of the Power of Siberia Russia-China natural gas pipeline in December. The construction of the northern part of the pipeline was completed on Wednesday.
The northern section of the pipeline will transport Russian natural gas as far as 1,067 km to northeastern China and Beijing-Tianjin-Hebei regions. Russia and China plan to complete the full part of the pipeline by 2022-2023. It will have a length of 3,371 km, passing nine Chinese autonomous regions and provinces before ending in Shanghai.
The pipeline will boost China’s energy security and optionality when it operates at a full capacity of 38 Bcm/year in 2022-2023, contributing to 9.5% of China’s 2022 total gas supply estimates of 402 Bcm. For the initial flow, PetroChina expects to receive 5 Bcm/year of natural gas supply, accounting for 1.6% of China’s 2019 total gas supply estimates of 316 Bcm.
The supply from the pipeline is expected to add a bearish factor to the already oversupplied market. However, it will not have a significant effect on the market during this winter, considering the relatively low initial flow.
