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Russian-Chinese talks over two new routes for Russian gas exports to China have stalled because China is reconsidering the power mix in its energy demand, including how much LNG it would need, Reuters reported on Wednesday, citing two Russian sources familiar with the talks.
Russia’s Gazprom, which is building the Power of Siberia pipeline from Eastern Siberia to China, has been talking to Beijing over two new potential routes, the Power of Siberia-2—the so-called western route—and a gas pipeline from the Sakhalin island in the Pacific.
“The Power of Siberia-2 and the Sakhalin pipeline - there are no moves. There are a lot of factors and they [China] are not yet ready to take any decisions,” said a Reuters source familiar with the talks.
A source from Gazprom also confirmed to Reuters that there were no advances in the talks over the two new proposed gas routes. If built, the two new pipelines would have a combined capacity of 40 billion cubic meters (bcm) of Russian gas supplies to China annually.
The Power of Siberia gas pipeline is moving ahead of schedule, with 720 km (447 miles) of the 3,000-km (1,864 miles) structure already built, Gazprom’s chief executive Alexey Miller said last month.
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.
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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 Beijing shifts away from coal and into less polluting energy sources.
According to BP’s Energy Outlook 2035, coal’s dominance in China’s energy mix will continue to decline, from 64 percent in 2015 to 42 percent in 2035, while natural gas would be nearly doubling to 11 percent in 2035.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.