Russia and China Ink Deal for Massive New Gas Pipeline
Russia’s gas giant Gazprom on Tuesday signed an agreement with China’s state energy firm CNPC to build a second huge natural gas pipeline from Russia to China, Gazprom’s CEO Alexey Miller said.
Russia bets on selling increased volumes of energy products to China after losing Europe as a key oil and gas export market following Putin’s war in Ukraine.
Gazprom and CNPC signed today a “legally binding memorandum” on the construction of the Power of Siberia 2 gas pipeline from Russia to China via Mongolia, Russian media quoted Miller as telling reporters in Beijing.
Power of Siberia 2 has been a topic of discussions between Russia and China for years but no progress has been made so far.
Currently, Russia supplies pipeline gas to China via the Power of Siberia pipeline, one of the biggest projects recently completed by Gazprom and the first conduit for Russian gas to China.
The Power of Siberia 2 pipeline is designed to ship gas from Russia’s Western Siberia Altai region to northeast China via Mongolia.
An agreement on the Power of Siberia 2 has been elusive due to some sticking points, including the price at which Gazprom will deliver the gas.
The memorandum signed on Tuesday doesn’t include details and issues such as prices or capacity commitments, so the key sticking points remain.
“It should be understood that the project of the Power of Siberia 2 gas pipeline construction and the Soyuz Vostok gas pipeline construction, the transit gas pipeline via Mongolia and related gas transport facilities in China, it will now be the largest, having the greatest scale and the most capital-intensive project in the gas industry globally,” Russian news agencies quoted Miller as saying on Tuesday.
Russia touted the project as the biggest ever in the global gas industry, while China has yet to confirm the deal, which is light on details.
Miller himself acknowledged that Russia and China have yet to discuss issues related to financing and the price of supply.
Sanctioned Russian Arctic LNG 2 Project Is Shipping Cargoes
The sanctioned Arctic LNG 2 project in Russia has accelerated cargo loadings and shipments in recent weeks, in a sign that the facility has now found its first customer after more than a year, and new buyers may have emerged—all in China.
Arctic LNG 2 is under sanctions by the United States, the EU, and the UK, which have also blacklisted many of the LNG vessels thought to be servicing the project’s output. The Russian export project has struggled for more than a year to find any buyer willing to risk secondary sanctions.
It appears that Arctic LNG 2 is done waiting and is now sending off loaded LNG cargoes, which could be testing the Trump Administration’s willingness to sanction Russia’s LNG customers in China.
Last week, a sixth LNG tanker loaded from the project in the Arctic this year, Reuters reported on Tuesday, citing vessel-tracking data by Vortexa and Kpler.
In recent weeks, signs have emerged that Arctic LNG 2 is coming back to life after a year of no activity and is looking for buyers in Asia.
La Perouse, a tanker sanctioned by the UK, loaded LNG and departed from Arctic LNG 2 on August 30-31, according to the data cited by Reuters.
Last week, a cargo from the facility docked at a Chinese import terminal in what appears to be Arctic LNG 2, testing the current U.S. willingness to enforce sanctions. The Arctic Mulan LNG tanker arrived at the Beihai LNG terminal, and China received the cargo, making it the first-ever actual exported cargo out of the Russian facility.
Six laden vessels are in transit, Ashley Sherman, senior LNG analyst at Vortexa, wrote on LinkedIn last week.
“In contrast to 2024, these sanctioned vessels have not spoofed or deactivated their AIS signals,” Sherman said, adding that “This year, Russia’s Arctic LNG 2 activity is no longer in the shadows.”
By Tsvetana Paraskova for Oilprice.com
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