Russia is building a new natural gas pipeline to China

Russian energy giant Gazprom has reached a significant milestone in its long-sought Power of Siberia 2 natural gas pipeline project. The company announced the signing of a formal, binding agreement to extend the pipeline from Mongolia to China. It also announced that gas shipments from existing pipelines will be increased.

MORE THAN 20 COLLABORATIONS

Gazprom CEO Alexey Miller said that once the pipeline becomes operational, it will be able to ship up to 50 billion cubic meters of natural gas annually to China. Miller also emphasized that the price of gas delivered through the pipeline will be lower than the prices the company charges its European customers. However, the Chinese government has not confirmed these details, while Xinhua News Agency reported that more than 20 cooperation agreements, including those related to energy, have been signed.

China's Cautious Approach

The Power of Siberia 1 pipeline, currently operating, is located in Heihe, Heilongjiang Province, China. Russia is focusing on new projects due to the decline in exports to Europe following the Ukraine war, while China is cautious about relying on a single supplier.

STRATEGIC IMPORTANCE

Experts consider this development in the Power of Siberia 2 project a diplomatic win for Russian President Vladimir Putin. Moscow, already strained by Western sanctions, sees the project as a strong indicator of the deepening Russian-Chinese energy cooperation that has been underway since 2022.

ONGOING UNCERTAINTIES

While Miller describes the project as "the world's largest and most comprehensive natural gas investment," many questions remain. Price negotiations have not been completed, and it's unclear whether China will be obligated to purchase at full capacity or whether it will offer flexible purchases. Furthermore, no definitive timetable has been announced for when construction will begin and when shipments will commence.

Capacity is being increased

Gazprom has decided to increase natural gas shipments to China via the existing Power of Siberia 1 pipeline by 6 billion cubic meters annually. This will increase the pipeline's total capacity from 38 billion cubic meters. Furthermore, shipments via the Far East connection, scheduled to begin in 2027, are expected to exceed the initially projected 10 billion cubic meters.

Source: Headline News – News Center