January 2020, Vol. 247, No. 1
Features
Long Time Coming: Power Of Siberia Delivers First Gas
The 1,865-mile (3,000-km) Power of Siberia $9 billion gas pipeline is set to become the longest transmission pipeline, east of the Ural Mountains, with its first delivery in mid-December. It will transmit 61 Bcm of natural gas a year from Irkutsk and Yakutia to Russia’s Far East, bringing vital energy for the economic development of the Russian side of the Amur River and onward.
The pipeline also introduces an additional source of gas to China, providing feedstock for planned gas-generation plants and helping reduce the country’s dependence on coal. By 2025, the Power of Siberia will have honored its $400 billion contract, signed in 2014 between Gazprom and Chinese government-owned CNPC, to supply 38 Bcm a year for 30 years, to in that nation’s north east.
For China, the pipeline will provide an additional source of gas to current pipeline supplies from Central Asia, or by tanker from Australia, Indonesia, Qatar and the United States.
For Russia, the Power of Siberia opens access to a new, large and growing market, allowing Gazprom to reduce its dependence on slowly growing Europe. It will also better protect Gazprom against future economic sanctions imposed by Washington. But, unlike with LNG traders who can exploit Asian and Atlantic spot markets, the price of Gazprom’s piped-gas to China is fixed.
Chinese Market
China is the world’s largest importer of gas, with its National Energy Administration (NEA) expecting consumption to reach 310 Bcm this year. The NEA predicts gas demand will rise by 82% to 510 Bcm by 2030, driven by industrial expansion, greater urbanization and difficulties with expanding domestic production of shale gas.
Deliveries of gas by the Power of Siberia pipeline have an effect on China’s LNG imports, too. Jin Lei, associate professor at the China University of Petroleum, predicts Australia, a major supplier will be adversely affected in the market not only by LNG’s cost disadvantage but also from its strained relationship with Beijing. The current trade war with China has already hit U.S. LNG exports, and the near prospect of Russian gas exports will further depress U.S. opportunities in China.
Massive Undertaking
Everything about the Power of Siberia pipeline project is big. For example, it has 1,865 miles (3,000 km) of 56-inch pipes and a working pressure of 9.8 MPa. The route crosses three Russian eastern Siberian regions, Irkutsk, Amur and the Republic of Sakha (Yakutia).
The pipeline passes through remote and often uninhabited swampy, seismically active mountainous regions, permafrost and rocky areas. The builders faced extreme environmental conditions, with the absolute lowest air temperatures along the Power of Siberia route ranging from minus 62 degrees C in the Republic of Sakha (Yakutia) to minus 41 degrees C in the Amur Region.
The 1,700 tons of Russian-made steel pipe used in its construction was produced at steelworks situated in the Chelyabinsk, Leningrad and Nizhniy Novgorod regions in European Russia.
Most of the pipeline segments first had to be transported over 3,107 miles (5,000 km) by rail to the project logistics center in the Irkutsk region, from where segments were distributed by river barges and trucks using ice roads to various construction sites along the route project. Pipe-laying began in 2014.
At the end of October 2019, Gazprom said it had completely filled up the pipeline along the entire section between the Irkutsk and Yakutia gas fields, and the Russian Chinese Amur River crossing near the city of Blagoveshchensk.
The first gas will cross the Amur River to a Chinese pipeline, which links major cities in Manchuria, as well as Eastern coastal cities like Beijing, Harbin and Shanghai. Gazprom expects the pipeline to deliver 5 Bcm of natural gas to China in its first full year and plans to steadily increase deliveries to reach 38 Bcm of gas by 2025.
Amursk Plant
Integral to the Power of Siberia pipeline and the supply of gas to China, is Gazprom’s construction of the massive Amur Gas Processing Plant (GPP), near the town of Svobodny in the Amur Region. This will become one of the largest gas processing facilities in the world, with design capacity to process 42 Bcm of natural gas a year alongside production of helium, methane, propane and butane. Once completed in 2021, the plant could employ as many as 3,000 people in what is a remote and underdeveloped region.
Internal flow coating of the Power of Siberia pipeline will reduce pipe friction and make transmission less energy-consuming. The pipeline’s external insulation coating is made up of innovative domestic nanocomposite materials for high corrosion resistance. In the areas with active tectonic faults, the pipes have been equipped with enhanced deformation properties and special engineering solutions, to reduce the possibility of cracks and resultant leaks.
Reliability and cost-effectiveness were major factors in Gazprom’s choice of equipment. For example, energy self-sufficient electric drives for pipeline valves use accumulators and can operate autonomously for 20 years, which helps reduce construction costs and energy consumption.
In order to mitigate environmental impacts, the Power of Siberia gas pipeline was designed to run primarily through sparse woods and fire sites (areas with burned trees). In addition, Gazprom uses rapidly deployable and self-propelled pipeline bridges in construction. One of the advantages of these bridges is they do not require intermediate supports to cross rivers, brooks, and ravines, which is important for preserving the environment.
Looking Ahead
In response to China’s ongoing hunger for new secure sources of cleaner energy to fuel its economy, both Russia and China are in talks about moving ahead with a long proposed 30 Bcm pipeline to be known as Power of Siberia 2. There are two possible routes under consideration, each with a preliminary price tag of at least $14 billion.
The western route would take gas from fields in Western Siberia via the Russian Chinese border, which separates the western tip of Mongolia from the eastern tip of Kazakhstan, before linking up with the 55 Bcm per year Central Asia-China pipeline, which transports gas from central Asian states such as Turkmenistan, Uzbekistan and Kazakhstan.
The eastern route would traverse Mongolia to access 60 million people living in Beijing, Tianjin and Shanghai regions. This route has three main advantages. First, it avoids the already congested Central Asia-China gas pipeline, which is expected to allocate any future capacity needed to domestic along its route. Secondly, although longer, this route crosses safer and flatter terrain, making construction easier.
Thirdly, and by no means least, the eastern route could encourage gasification within Russia and reduce Russian dependence on gas exports to Europe. But at the same time, it exposes Gazprom to Mongolian transit fees.
Once the Power of Siberia pipeline reaches its full capacity in 2025, China will become Russia’s largest buyer of natural gas, displacing Germany. Ultimately, the pipeline could connect production and demand centers to the east and west and enable Russia to export gas to ice-free LNG ports on Russia’s Pacific Coast. The geopolitical significance of the Power
of Siberia pipeline is not to be underestimated.
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