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“Power of Siberia” lines.. Will China overtake Europe as a major importer of Russian gas?


Russia intends to make up for its lost market share in Europe by shipping natural gas to Asia, especially China. Will Beijing overtake Brussels? And what about the Power of Siberia 2 pipeline?

China is expected to overtake the European Union as the main importer of Russian natural gas after the commissioning of the "Power of Siberia 2" pipeline by 2030.

The Power of Siberia 2 pipeline will bring natural gas from the Yamal field in western Siberia to China, the world's largest energy consumer and the fastest growing gas consumer.

The Yamal field is the main source of gas supplies to Europe, and Siberia is the largest source of natural gas in Russia.

The "Power of Siberia 2" pipeline was finally examined after the European Union decided to abandon Russian hydrocarbons (oil and gas) following the outbreak of the Russian-Ukrainian war on February 24.

The conflict, which has entered its tenth month, has led to an unprecedented energy war between Russia and Western powers, which has increased pressure on global oil and natural gas markets.

Roofing the price of Russian gas

European countries - which have imposed many sanctions on Russia and decided to ban Russian oil transported by sea at a maximum of $60 (57 euros) per barrel - are discussing imposing a similar price ceiling on Russian gas, but differences between member states prevented a final decision in this regard from being taken.

In 2021, the bloc witnessed annual gas imports from Russia of about 155 billion cubic meters on average, equivalent to about 45% of its total gas imports.

The ceiling for the price of Russian natural gas - which is expected to be about 200 euros per megawatt-hour - has sparked controversy in the European Union, and led to the division of countries between supporters and opponents such as Germany, Belgium and Poland.

Germany believes that setting a ceiling on the price of Russian gas exports would pose threats to the security of natural gas supplies, while Belgium, Poland and Italy see the price ceiling as a way to protect consumers from price fluctuations.

The price of natural gas in mid-December is about 130 euros per megawatt-hour, down from 340 euros per megawatt-hour last August, according to the Netherlands-based hypothetical natural gas trading point (TTF).

EU energy ministers are due to meet again to discuss a possible price cap.

China.. the main target market for Russia

As for Russia, which relies heavily on Europe for natural gas exports, it intends to compensate for its lost market share in Europe by shipping natural gas to Asia, especially China.

Referring to a possible shift in the Russian energy map, Russian President Vladimir Putin said, on April 14, that he had instructed the government to prepare to shift supplies of energy resources to the east, against the backdrop of the West's plan to stop buying them.

In this regard, Russian Deputy Prime Minister Alexander Novak said last September that Russian natural gas exports to European Union countries are expected to decrease by 50 billion cubic meters in 2022.

The Power of Siberia 1 pipeline, Russia's only export pipeline to Asia in service, has not yet reached its full capacity.

It is planned that the "Power of Siberia 1" pipeline will transport 38 billion cubic meters of natural gas from Russia to China once it reaches its full capacity, but this volume represents only 25% of the annual average of about 155 billion cubic meters of gas sent. to Europe before the war.

Besides the Power of Siberia 1 pipeline, Russia plans to build a second pipeline, the Power of Siberia 2, which is expected to start work by 2024 and be completed by 2030.

Russia currently supplies China with about 10% of its annual gas imports through pipelines and LNG ships, but with the planned improvements, Russia will become the main supplier of gas to China.

According to estimates, 50 billion cubic meters of natural gas can be pumped annually through the Power of Siberia 2 pipeline, bringing the total gas imports from Russia to China to 88 billion cubic meters when both Power of Siberian pipelines reach their full capacity.

According to the agreement between Gazprom and China's CNPC, preventive maintenance of the "Power of Siberia" equipment and systems is carried out in the spring and autumn of each year.

And "Siberian Power 1" is a gas pipeline aimed at pumping natural gas from fields in the Russian Far East to China, and supplies through it to China began on December 2, 2019.

Russia currently provides China with about 10% of its annual gas imports through pipelines and LNG ships, but with the planned improvements Russia will become the main supplier of gas to China.

greater consumption

China currently imports about 45% of its gas needs - which amounts to about 372 billion cubic meters annually - of which it produced 208 billion cubic meters of natural gas, and imported more than 160 billion cubic meters in 2021.

China receives a third of its gas from pipelines, and the rest from LNG transported by ship.

It also imported 53.2 billion cubic meters of gas through pipelines last year, compared to 109.5 billion cubic meters of LNG.

Among the suppliers of LNG to China: Australia with 43.6 billion cubic meters, the United States with 12.4 billion cubic meters, Qatar with 12.3 billion cubic meters, and Malaysia with 11.7 billion cubic meters.

The country imported 31.5 billion cubic meters of gas through pipelines from Turkmenistan, 7.6 billion cubic meters from Russia, 5.9 billion cubic meters from Kazakhstan, 4.3 billion cubic meters from Uzbekistan, and 3.9 billion cubic meters from Myanmar.

China has 24 LNG processing plants as of November 2022, with a total annual receiving capacity of 109.5 million tons.

The country owns 15 gas storage stations, with a total capacity of 17 billion cubic meters of gas.

In addition, Beijing intends to expand its LNG processing plants, adding 34 new ones by 2035, bringing the total capacity to 224 million tons.

Most of the LNG stations are located in the southern and eastern Chinese cities

Source: aljazeera

All news articles on 2022-12-18

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