Russia Looks to Companies Beyond Gazprom to Supply Gas to China

(Reuters) — Russia is considering supplying natural gas to China by a pipeline from companies other than Kremlin-controlled Gazprom, which currently has the monopoly for Russian pipeline gas exports, an Energy Ministry official said on Tuesday.

Artem Verkhov, head of Russia's Energy Ministry's department of gas industry development, said natural gas from the deposits of Rosneft and Irkutsk Oil Company, or INK, could be used for the future Power of Siberia 2 pipeline.

Speaking at a conference in Moscow, he said no decision has been made.

Moscow is looking to the 2,600 km (1,620 mile) pipeline — which would have a capacity of 50 billion cubic meters (Bcm) of gas per year — as a way to replace lost exports to Europe.

President Vladimir Putin discussed the plan with Chinese President Xi Jinping last month.

While Russia is in a hurry to clinch a deal, Beijing is well-placed to drive a hard bargain as analysts say China is not expected to need additional gas supply until after 2030.

Kommersant daily reported in January that Rosneft wanted to supply natural gas from its fields in the Krasnoyarsk and Irkutsk regions to the Power of Siberia 2 pipeline that will supply China via Mongolia.

Russia already exports gas to China via the Power of Siberia 1 pipeline. It exported over 15 billion cubic meters (Bcm) of gas via the route last year, and expects to increase the supplies to 22 Bcm this year.

Vyacheslav Kulagin from Moscow-based Energy Research Institute told the same conference Russia was unlikely to achieve any profit from the pipeline gas exports to China this decade as it will be recovering costs and paying taxes.

"It would be great if we will gain some profit at Power of Siberia 1 by the middle of the next decade," he said.


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