Russia to Start Gas Supply to China Via Siberia in 2019

Russia to Start Gas Supply to China Via Siberia in 2019Russia to Start Gas Supply to China Via Siberia in 2019

Russia's largest natural gas producer Gazprom will start supplying fuel to China through Siberia on Dec. 20, 2019, Gazprom Chief Executive Alexei Miller told reporters, after a meeting with China National Petroleum Company.

CNPC Chairman Wang Yulin and  Miller met during this week's visit to Moscow by Chinese President Xi Jinping and signed a China-Russia supplementary purchase and sale contract, the state-owned Chinese company said on its website on Wednesday. It did not provide further details, Reuters reported.

The deal is the latest sign that Russia is strengthening its ties with China, a major gas buyer. It comes at a time of turmoil for rival major exporter Qatar amid a dispute with its Persian Gulf Arab neighbors who have imposed political and economic sanctions on Doha. The new pipeline, dubbed "Power of Siberia", has a planned annual capacity of 38 billion cubic meters.

CNPC added that it agreed to speed up the construction of pipeline and market development, as well as natural gas processing plants and domestic underground gas storage facilities to enssure the project starts on time.

While the start date appears ambitious, analysts said the pipeline's volume by the end of 2019 would likely be low and ramping up to full capacity would take some time. Russia needs to develop two new gas fields to fill it.

"Russia may have offered China concessions on prices to secure its backing for the project," said Massimo Di Odoardo, vice president of global gas and LNG research at Wood Mackenzie. "Clearly, this announcement is a big push to show the project is still alive. We wondered if this big push could also include some concessions."

Wang also met with Rosneft President Igor Sechin and discussed expanding crude oil trade, improving revenues from the Tianjin refinery project and expanding cooperation in exploration and development in Russia, CNPC said.

Miller said natural gas consumption in China was set to reach 300 billion cubic meters annually in the next few years.


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