LNG

Persistent disruptions to LNG flows through the Strait of Hormuz bolster Russia’s chances of getting the Power of Siberia II pipeline built. A 2032 startup would give Gazprom a new major outlet, as the EU’s 2027 ban on Russian LNG reshapes Moscow’s long-term export strategy.

Gazprom, the Russian pipeline gas and LNG provider looking for other markets after being frozen out of the West over the Ukraine invasion, said it had significantly increased pipeline flows to China National Petroleum Corp. (CNPC) in line with existing supplemental agreement.

Oct 20 (LNGJ) – Russia’s Gazprom and China National Petroleum Corp. said they signed an additional agreement for China to receive more pipeline natural gas from Siberia from the end of 2023. Gazprom Chief Executive Alexey Miller and CNPC Chairman Dai Houliang signed the deal after a meeting in Beijing. 

   “During the meeting Gazprom and CNPC signed an additional agreement to the gas sales contract on the eastern route for an extra volume of supplies of Russian gas to China by the end of 2023,” said a statement that gave no details of volumes. Gazprom also said it had made more progress in the design works on the Soyuz Vostok gas pipeline that will cross Mongolian territory into China and that would become the continuation of the “Power of Siberia II” gas pipeline. 

Russian natural gas company Gazprom said it had halted supplies to China through the “Power of Siberia” pipeline running from Russia’s Far East into China’s northeast Heilongjiang province.

Russian pipeline natural gas giant Gazprom and the Chinese energy major, China National Petroleum Corp. (CNPC), have signed a new long-term Sales and Purchase Agreement for additional gas to be supplied in the Far East via Mongolia.

“The signing of this document is an important step towards further strengthening the mutually beneficial cooperation between Russia and China in the gas sector,” said Gazprom.

“As soon as the project reaches its full capacity, the amount of Russian pipeline gas supplies to China is going to grow by 10 billion cubic metres, totalling 48 Bcm per year,” added the company.

Gazprom, based in Saint Petersburg, said these deliveries to China include those via the existing “Power of Siberia” gas trunkline.

“This is the second contract to be signed for Russian gas supplies to China, and it is indicative of the exceptionally strong mutual trust and partnership between our countries and companies,” said Gazprom Chief Executive Alexey Miller.

“Our Chinese partners from CNPC have already seen for themselves that Gazprom is a reliable gas supplier,” stated Miller.

Gazprom stated that CNPC, a state-owned oil and gas company, had emerged as Gazprom’s main partner in China.

Power of Siberia II

Gazprom and CNPC signed their 30-year Sales and Purchase Agreement for 38 Bcm per annum in 2014 via the “Power of Siberia” gas pipeline.

The actual start of deliveries to the Chinese was on the 2nd of December 2019 when a ceremony was held to mark the event.

Gazprom explained that in January 2022, a feasibility study was completed for the Soyuz Vostok gas trunkline construction project.

The Soyuz Vostok pipeline will stretch for 963 kilometres (598 miles) on Mongolian territory and will also include five compressor stations.

The trunkline will become an extension of Russia's “Power of Siberia II” gas pipeline and will make it possible to supply the additional 10 Bcm per year to China.

The “Power of Siberia” pipeline is 3,000-kilometres (1,865-mile) in length for the Russian section to the Chinese border.

Analysts note that Russia had been offering to get a pipeline built to China for about a decade before China through CNPC agreed to it in 2014.

They said that the timing of that 2014 agreement was not accidental, but followed sanctions that Western countries imposed on Russia after it invaded Ukraine and took over Crimea.

Now that the Ukraine crisis with Russia has again blown up, the Russians have announced a new China gas supply deal.

It comes at a time when the Nord Stream II pipeline for Russian gas to Germany has been blocked by the Germans supported by the European Union and the project suspension is now tied up with the Ukraine issue.

China is already the world's largest natural gas consumer in 2022 and buys about 43 percent of its gas from abroad, including 106 Bcm (79 million tonnes) of LNG and 58 Bcm of pipeline gas, according to the country's General Administration of Customs. 

Elixir Energy, the Australian exploration and production company with plans for a small-scale liquefaction plant using coal-seam gas to provide clean fuel for trucks in Mongolia, is making progress in its South Gobi Desert operations with prospective resources having almost doubled to 14.6 trillion cubic feet.

Russian natural gas giant Gazprom has set up a subsidiary to develop a pipeline across the land-locked Asian country of Mongolia as Russia’s second “Power of Siberia” supply line to China in competition to LNG and with capacity of one-third more than the existing pipeline.

Russian natural gas giant Gazprom marked the first anniversary of the coming on stream of the first gas pipeline from Russia to China, regarded as competition for LNG, but details released of current pipeline operations and capacities show less than expected year-one deliveries.

Gazprom and China National Petroleum Corp. have held talks on the increasing deliveries of pipeline natural gas to Northern China from Russian in the Power of Siberia pipeline project in competition with LNG cargoes, with the Chinese asking and receiving higher daily volumes.