News Article

Russia’s 3 new pipelines secures role as leading gas exporter

Russian President Vladimir Putin and Chinese leader Xi Jinping launched a gas pipeline on Monday, the first of three ambitious projects aimed at strengthening the role of Moscow as a top gas exporter.

Putin and Xi will inaugurate the “Power of Siberia” pipeline by video, sending Siberian gas to China in a move that will strengthen their ties in the confrontation between Moscow and the West.

Russia also plans to launch two more gas pipelines shortly, which will boost supplies to Europe while bypassing Ukraine.

TurkStream, to be launched in January by Putin and Turkish leader Recep Tayyip Erdogan, is to transport Russian gas to Turkey.

Nord Stream-2 is scheduled to go live in mid-2020, which would double the amounts of Russian gas to Germany.

Analysts said the three ventures had long-term economic and political advantages for Russia, which has put itself between Western European markets and East China’s rapidly growing economy.

“Russia isn’t only generating new income streams but hedging its bets and strengthening its position strategically,” said energy analyst Andrew Hill.

“The ability to drive one off against the other will not be lost on either Gazprom or the Kremlin,” Hill, who leads the EMEA Gas and Power Analytics team of S&P Global Platts wrote in a blog post.

He said the three projects were a sign of the increasing maturity of the Russian gas industry-” this kingpin of the global gas sector

Putin’s spokesman, Dmitry Peskov, said it was difficult to overestimate the significance of the 3,000-km Siberian Power Pipeline running from remote areas of East Siberia to Blagoveshchensk on the Chinese border.

“This is important for our country, this is important for China,” he said before the launch, stressing that in Russia’s Far East, the project would create jobs and infrastructure.

Russia’s huge construction project

The pipeline, which Putin has called “the world’s largest construction project” culminates years of hard negotiations and work under challenging conditions.

After a decade of tortuous negotiations, a 30-year, $400 billion deal was signed in 2014. It was the most important contract for the Russian gas giant Gazprom.

When the pipeline becomes fully operational in 2025, Gazprom will provide China with 38 billion cubic meters of gas per year.

Gazprom stressed that the pipeline is operating through “swampy, rugged, seismically active, permafrost and unstable areas with severe environmental conditions.”

Temperatures in Yakutia, along with the route, drop below minus 6 degrees Celsius and below minus 40 C in the Amur region of Russia’s Far East.

Speaking last week in Moscow, Chinese Vice Minister of Foreign Affairs Le Yucheng said the pipeline would boost cooperation and allow the two countries to “to complement each other’s strengths and pursue common rejuvenation.”

Officials also said construction on the first road bridge between Russia and China had been finished prior to the launch.

The bridge, to be opened next year, would link Blagoveshchensk’s city with Heihe’s northern Chinese city.

The release of Siberia’s Power comes in the wake of a continuing dispute about Nord Stream 2.

The € 9.5 billion (US$ 10.6 billion) project has faced opposition from countries in Eastern and Central Europe, the United States, and particularly Ukraine, as it is likely to increase Europe’s reliance on Russian gas.

U.S. President Donald Trump threatened to hit Nord Stream 2 with penalties and those related to it.

Thierry Bros, an energy expert at the Davis Center for Russian and Eurasian Studies at Harvard, while praising Russia’s gas projects with China and Turkey, said that the Baltic energy link became a victim of strong opposition from many in the West.

“Nord Stream 2 is not really a success,” he told AFP, noting that when Gazprom could fully capitalise on its investment, it was hard to say.

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