Gazprom Begins Preparation for Power of Siberia-2

Russian gas giant Gazprom has begun a feasibility study for its Power of Siberia-2 pipeline project that would pump up to 50 billion cubic meters of natural gas to China per year via Mongolia, the Russian gas producer said. 

Proposed Power of Siberia-2 Route Photo: Gazprom

Alexey Miller, chairman of the Gazprom Management Committee, said the resource base of the Yamal Peninsula will be used for gas supplies to Asian and European markets, with the Power of Siberia 2 potentially transporting up to 50 Bcm per year of natural gas to China across Mongolia.

“A preliminary feasibility analysis has been carried out. It has shown that the project is feasible and cost-effective,” Miller said. “We are ready to continue this work accordingly.”

Miller said it is “a totally independent goal to connect the existing gas transmission facilities in Eastern Siberia and the gas transmission facilities and gas supply systems in European Russia.

“Without any doubt, this will make it possible to provide reverse-flow and forward-flow gas supplies in both directions, and will enhance the reliability of gas supplies in Russian regions even more,” he said.

The plan for the route was first announced years ago. Gazprom currently pumps gas to China via its Power of Siberia pipeline in eastern Siberia.

The 3,000-km-long (1,865 mile) Power of Siberia pipeline transports gas from the Chayandinskoye and Kovytka fields in eastern Siberia, to Heilongjiang, which borders Russia, and goes onto Jilin and Liaoning, China’s top grain hub

The project expected to last for three decades and to generate $400 billion for Russian state coffers.

Flows via the pipeline are expected to gradually rise to 38 billion cubic meters (bcm) per year in 2025, possibly making China Russia’s second-largest gas customer after Germany, which bought 58.50 bcm of gas from Russia last year.

Moscow began supplying natural gas to western and central Europe in the 1950s and Europe has long been Russia’s major consumer of gas, supplied by Kremlin-controlled energy giant Gazprom, with total annual supplies of around 200 bcm.

The price China is paying for Russian gas in the new pipeline remains a closely kept secret with various industry sources saying it is tied to the price of an oil products basket.

Russia has dramatically increased deliveries of oil to China in the past decade, challenging Saudi Arabia as China’s top oil supplier in certain months.

To achieve that, Russia launched a major oil pipeline to China, which today ships 600,000 barrels per day (bpd) and opened a new port at Kozmino on the Pacific.

Russia also ships 200,000 bpd to China via a pipeline crossing Kazakhstan.

— P&GJ Staff and Wire Report

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