Russia and China sign major energy deal
The 30-year agreement will boost gas supplies by 10 billion cubic meters and will be settled in euros
Russia’s Gazprom and the China National Petroleum Corporation (CNPC) signed a second long-term contract on Friday for the supply of 10 billion cubic meters (bcm) of natural gas from the Russian Far East. The agreement comes as Russian President Vladimir Putin is in China on an official visit.
According to Gazprom, the agreement is “an important step in further strengthening mutually beneficial cooperation between Russia and China in the gas sector.” After the project reaches its full capacity, the volume of Russian pipeline gas supplies to China via the Far East route will reach 48 billion cubic meters per year (including deliveries via the Power of Siberia gas pipeline).
Gazprom’s largest natural gas deposit in the Far East is the Yuzhno-Kirinskoye field, where production is due to begin in 2023.
“The signing of the second contract for the supply of Russian gas to China testifies to the highest level of mutual trust and partnership between our countries and companies. Our Chinese partners from CNPC confirm that Gazprom is a reliable gas supplier,” the head of Gazprom, Alexey Miller, said.
Russian energy supplies to China have reached record highs, according to Kremlin aide Yury Ushakov.
Gazprom and the CNPC signed their first 30-year contract on gas supplies via the Power of Siberia pipeline in 2014. The 3,000km (1,864 mile) cross-border pipeline, the first natural gas pipeline between Russia and China, started deliveries three years ago.
In 2015, the sides agreed on gas supplies via the western route, or the Power of Siberia 2, which will deliver gas from Siberia’s Yamal Peninsula, where Russia’s biggest gas reserves are. The new pipeline will be able to transfer up to 50 bcm more gas through Mongolia to China annually.
Russia triples gas supplies to China via Power of Siberia pipeline
In January, Gazprom completed an analysis of the project to build the Soyuz Vostok gas pipeline through Mongolia to China, which will make it possible to supply up to 50 billion cubic meters of gas per year to China.
Analysts say Moscow’s ‘gas pivot’ to China poses a challenge for Europe, which has been struggling with skyrocketing energy prices in recent months. Russia remains Europe’s main gas supplier, but the changes it is currently making to its energy transport infrastructure should be taken seriously, analysts note.
Europe’s 541 bcm of annual gas consumption is more than China’s 331 bcm, but the latter is expected to rise to 526 bcm by 2030 as Beijing reduces its dependence on coal. Consulting firm McKinsey estimates that China’s demand for gas will double by 2035. Its annual gas consumption is expected to reach 620 bcm by 2040 and overtake oil as the leading fuel source by 2050, according to data made public in September by Chinese energy giant Sinopec.
Russia triples gas supplies to China via Power of Siberia pipeline
Russia triples gas supplies to China via Power of Siberia pipeline
An employee walks past a part of Gazprom's Power Of Siberia gas pipeline in Amur region, Russia © Reuters / Maxim Shemetov
Russia’s energy major Gazprom said on Monday that it had pumped more gas to China in February via the Power of Siberia pipeline than it had initially planned, more than tripling supplies compared to the same month last year.
“The export of gas to China through the Power of Siberia gas pipeline continues to grow. Supplies regularly exceed our daily contractual obligations. The actual monthly volume of supplies in February is 3.2 times more than in February 2020,” Gazprom said in a statement.
The 3,000km (1,864 mile) cross-border pipeline started official deliveries of Russian natural gas to China in 2019. The so-called eastern route’s capacity is 61 billion cubic meters of gas per year, including 38 billion cubic meters for export. Last year, Gazprom supplied 4.1 billion cubic meters of gas to China via the Power of Siberia. It plans to boost exports by an additional six billion cubic meters.
The agreement on gas supplies via the Power of Siberia pipeline was reached in 2014, with Gazprom and the China National Petroleum Corporation (CNPC) inking a 30-year contract. It is Gazprom’s biggest-ever agreement and the first natural gas pipeline between Russia and China.
Russia is set to further increase supplies of piped gas to China, including via the Power of Siberia 2 project. This second pipeline entered the design stage last year, and will be capable of delivering as much as 50 billion cubic meters of gas once it’s finished. Gazprom intends to become China’s biggest natural gas supplier, accounting for more than 25 percent of Chinese imports by 2035.
Russian gas producer Novatek plans to send cargo from its Yamal LNG facility to Asian markets via the Northern Sea Route (NSR) in early May with the help of an ice-breaker, sources told Bloomberg.
The cargo would become the earliest-ever shipment of liquefied natural gas to Asia, beating last year’s record by almost two weeks and paving the way for a record navigation season this year.
The exact timing of the LNG shipment will depend on weather conditions and the thickness of the ice, according to officials. "The possibility of such a voyage in May is under discussion,” said Nikita Sekretarev, spokesperson for Russia’s Sovcomflot shipping company.
Stretching more than 5,000km between the Barents Sea and the Bering Strait, the NSR is the shortest passage between Europe and Asia. Its eastern part is usually shut for navigation for several months at the start of the year due to thick ice, which limits shipment potential.
Novatek sent an eastbound LNG cargo via the NSR with ice-breaker support which was the earliest start to the navigation season in the area to date. Shipments continued to Asia through January, making it a record long navigation season in the eastern Arctic.
Earlier this month, Novatek sent two LNG tankers (‘Christophe de Margerie’ and ‘Nikolay Yevgenov’) to China through the NSR. Industry officials said that the vessels don’t need ice-breaker support as the current conditions in the eastern Arctic are mild. Nevertheless, the tankers will use an ice-breaker on their return to Russia across the passage in February.
According to Sovcomflot, which owns the ‘Christophe de Margerie’, a cargo ship has never made a February voyage in the eastern Arctic. The planned February return voyage is part of “the systemic efforts to gradually extend transit navigation in the eastern sector of the Arctic,” said Sekretarev, adding: “In the future, the goal is to set up safe year-round navigation” across the Northern Route.
Russia wants to turn the NSR into a major trade artery between Europe and Asia. Last year, 33 million tons of freight were transported using the Arctic route.
