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A deal between China and Russia over the Power of Siberia natural gas pipeline could be reached yet this year, according to new statements from Russian Deputy Prime Minister Alexander Novak.
The planned Power of Siberia pipeline will carry 50 billion cubic meters of natural gas per year from Russia to China across Mongolia, along the pipeline's 1,620 miles. The pipeline was one of the topics of discussion between Russian President Vladimir Putin and Chinese President Xi Jinping at a summit this week, Reuters said on Thursday.
PM Novak said that Gazprom had been given instructions to reach a deal as soon as possible, with Gazprom hoping to start deliveries of 50 bcm by 2030.
"Now the contract terms are being finalized between Gazprom and the Chinese company CNPC. A feasibility study is already underway, the design of the gas pipeline route through the territory of Mongolia," Novak said, according to Russian news agency TASS.
China is thought to have already secured gas supplies through 2030, and due to sanctions and embargos on Russia's oil and gas, China is perhaps in a better position to negotiate than Russia is.
The first Power of Siberia pipeline is already up and running, although not yet at full capacity. Last year, Power of Siberia 1 delivered 15.4 billion cubic meters last year.
According to earlier statements from Novak, the Power of Siberia 2 pipeline will require $67 billion in direct investment and $27 billion in related industries.
While Russia is suggesting that the deal is close to being finalized, with President Putin saying that "practically all of the parameters of that agreement have been finalized," a joint statement released Wednesday said, rather vaguely, that "the two sides will work together to promote studies and consultations on the new China-Mongolia-Russia natural gas pipeline project."
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.
In addition to LNG being supplies to China by Russian LNG giant Novatek from the Arctic, Russia will dominate the Chines gas market as it is now dominating China’s crude oil market.
Dr Mamdouh G Salameh
International Oil Economist
Global Energy Expert