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Russia seeks to diversify its natural gas exports

Russia is considering supplying natural gas to China via companies other than Gazprom. The Power of Siberia 2 pipeline could be used with gas from Rosneft and INK, but China could be in a strong position because it does not need additional supplies until 2030.

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Russia is considering supplying natural gas to China through a pipeline owned by companies other than Gazprom, which currently has a monopoly on pipeline gas exports in Russia.

Power of Siberia 2 pipeline could replace lost exports to Europe

According to Artem Verkhov, the head of the Russian Ministry of Energy’s gas industry development department, natural gas from Rosneft and Irkutsk Oil Company (INK) could be used for the future Power of Siberia 2 pipeline. The 2,600 km pipeline could transport up to 50 billion cubic meters of gas per year and replace lost exports to Europe.

At a conference in Moscow, Verkhov said that no decision had been made yet and that Moscow was looking to reach an agreement quickly. Russian President Vladimir Putin discussed the project with Chinese President Xi Jinping last month. However, analysts suggest that China is not expected to need additional gas supplies until 2030, putting Beijing in a position to negotiate hard.

Rosneft plans to supply natural gas from its Krasnoyarsk and Irkutsk fields

 

Rosneft apparently wants to supply natural gas from its fields in the Krasnoyarsk and Irkutsk regions to the Power of Siberia 2 pipeline, which will supply China via Mongolia. Russia already exports gas to China through the Power of Siberia 1 pipeline, and exported more than 15 billion cubic meters of gas through it last year. It plans to increase supplies to 22 billion cubic meters this year.

Vyacheslav Kulagin, an expert at the Moscow Energy Research Institute, said Russia was unlikely to make a profit from pipeline gas exports to China this decade. He suggested that the country would only recover its costs and pay taxes. “It would be great if we could turn a profit with Power of Siberia 1 by the middle of the next decade,” he added.

Indeed, Russia is considering supplying natural gas to China through a pipeline owned by companies other than Gazprom. The Power of Siberia 2 pipeline could transport up to 50 billion cubic meters of gas per year and replace lost exports to Europe. While Russia is eager to strike a deal, China is not expected to need additional gas supplies until 2030, putting Beijing in a position to negotiate hard.

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