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Russia's Landmark Pipeline Could Transform Global Gas Markets

The Power of Siberia gas pipeline that will bring Russian natural gas to the world’s biggest gas importer, China, will start operations in December, Geng Shuang, spokesperson for China’s Foreign Ministry, said on Tuesday.

The Power of Siberia, one of the largest natural gas pipeline projects in the world, will transport natural gas from the Irkutsk and Yakutia production centers to consumers in Russia’s Far East and to China.

Gazprom is dominating gas supplies to many European markets, while it also vies to meet rising Chinese natural gas demand as the country is in the middle of a massive switch from coal-fired to gas-fired heating in millions of homes. Russia wants a share of that market and the Russian gas giant looks to supply pipeline gas to China.

At the end of last month, Gazprom said that it had completed feeding natural gas into the Power of Siberia, whose linear part is now ready for the start of Russian pipeline gas supplies to China. The next step is to feed gas into the trans-border crossing under the Amur River, Gazprom said.

“With the concerted efforts of the two sides, the project is scheduled to launch its operation in December this year,” Geng said today, asked to confirm information from Yury Ushakov, Aide to Russia’s President Vladimir Putin, who said on Monday that Putin and Chinese President Xi Jinping would take part in a teleconference next month to launch the pipeline.

Related: The One Factor Driving Today’s Oil Markets

“It is of great significance to deepening all-round cooperation between the two countries and advance integration of our interests,” the Chinese foreign ministry spokesman said, referring to the pipeline.  

Gazprom has a 30-year contract with CNPC for the supply of an annual 1.3 trillion cu ft of natural gas via the infrastructure. The completion of the pipeline has been among Gazprom’s top priorities in recent years.

At an investor day presentation in February, Gazprom said it expects its market share in China to grow from zero to more than 25 percent of Chinese gas imports and to account for 13 percent of China’s gas consumption by 2035. By that year, Gazprom vies to be the number one gas supplier to both Europe and China, according to its presentation.

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By Tsvetana Paraskova for Oilprice.com

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