• 3 minutes Oil Price Could Fall To $30 If Global Deal Not Extended
  • 8 minutes Why Is America (Texas) Burning Millions of Dollars Per Day Of Natural Gas?
  • 11 minutes Is $60/Bbl WTI still considered a break even for Shale Oil
  • 15 minutes CNN:America's oil boom will break more records this year. OPEC is stuck in retreat
  • 4 hours The Pope: "Climate change ... doomsday predictions can no longer be met with irony or disdain."
  • 1 day Hormuz and surrounding waters: Energy Threats to the World: Oil, LNG, shipping markets digest new risks after Strait of Hormuz attack
  • 51 mins Greenpeace claims one oil rig is "pushing the world closer to a climate catastrophe"
  • 13 mins Middle East on brink: Oil tankers attacked off Oman
  • 21 hours Russia removes special military forces from Venezuela . . . . Maduro gone by September ? . . . Oil starts to flow ? Think so . .
  • 8 hours The Latest: Iranian FM Says US Cannot Expect To ‘Stay Safe’
  • 2 days Never Knew Gasoline Prices were this important!
  • 1 day The Magic and Wonders of US Shale Supply: Keeping energy price shock minimised: US oil supply keeping lid on prices despite global risks: IEA chief
  • 1 day Plants are Dying
  • 7 hours Emmissions up, renewables nowhere
  • 1 day We Are Better Than This
  • 2 days As Iran Nuclear Deal Flounders, France Turns To Saudi For Oil
  • 2 days (Un)expectedly: UK Court Sets Assange U.S. Extradition Hearing For February 2020

Power Of Siberia Pipeline Ahead Of Schedule

Pipeline

The Power of Siberia gas pipeline that will carry Russian natural gas to China is moving ahead of schedule, with 720 km of the 3,000-km structure already built, Gazprom’s chief executive Alexei Miller told a Russian TV channel, as cited by local online media. Miller was also quoted as saying that Gazprom will settle the main terms of the deliveries via the Power of Siberia soon.

The pipeline is a key element in a 30-year gas supply deal between Moscow and Beijing worth US$400 billion in total. Under the terms of the deal, signed in 2014, the China National Petroleum Corporation, or CNPC, will buy 38 billion cubic meters of natural gas from Gazprom annually, starting in 2025. Before that year, it will be receiving smaller amounts of the fuel.

The full 38-billion cubic meter volume represented a fifth of China’s oil consumption in 2014 and 60 percent of its imports in that year.

The Russian side committed to spend US$70 billion, including US$35 billion for the construction of the Power of Siberia, US$20 billion for field development, and another US$15 billion for a gas-treatment plant, to be built on the Russian-Chinese border in partnership with local chemicals major Sibur.

The contract is of strategic importance for the two sides, more so for Russia, which needs markets for its gas more than China needs specifically Russian gas deliveries – everyone is eager to export gas to China as Asia’s second-biggest economy shifts away from coal and into less polluting energy sources.

While Gazprom is limited in its choice of markets and is facing stern opposition in the European Union because of its perceived dominant position, China can pick from a host of gas suppliers, including the U.S. Just last week, Presidents Donald Trump and Xi Jinping struck a deal for U.S. LNG supplies, as well as some goods, to China.

By Irina Slav for Oilprice.com

More Top Reads From Oilprice.com:



Join the discussion | Back to homepage

Leave a comment
  • Sergei on December 19 2017 said:
    “… Russia, which needs markets for its gas more than China needs specifically Russian gas deliveries”

    Actually, Russia and China are both equally interested in this deal.

    Russia can sell LNG to any country in the world, but when selling to a direct neighbor, it's cheaper to build a pipeline. Especially since Russian companies own a complete supply chain required to build land pipelines (i.e. there's zero dependency on foreign companies). Similarly, China can buy LNG from any country in the world, but it's much cheaper to buy pipeline gas. Both countries save money. It's a win-win.

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News