Russia to Supply a Lion's Share of China's Natural Gas Imports

10 april 2019 | Oil and Capital

"The projects to supply Russian natural gas to China via new pipelines meet the strategic interests of both Russia and China, which means they are very likely to be implemented," said Alexander Amiragyan, Deputy Head of the Department for Fuel, Energy and Housing Utilities of the Analytical Center, in his interview for the Oil and Capital portal.

Alexander Amiragyan
Alexander Amiragyan
Department for Fuel and Energy Sector

The expert is of the opinion that once the Power of Siberia 2 pipeline is commissioned and construction of a new branch pipeline of the Sakhalin–Vladivostok mainline commences, Russia will be able to expand its exports of natural gas and thus further monetize its natural resources, while China will be able to diversify its source of natural gas while reducing the dependence of its power generation on coal, thereby solving major environmental problems.

Meanwhile, there are a number of significant differences between the two pipeline projects in question. "The Power of Siberia 2 is a mega-project whose implementation is only possible if China pledges to buy natural gas from Russia over the long term and external financing can be raised. The new branch pipe from the existing Sakhalin–Khabarovsk–Vladivostok mainline has the advantage as there is already one operational pipeline in place. However, the amount of natural gas that can be supplied from Sakhalin is limited because the production can hardly be expanded there over the next few years," Mr Amiragyan explained.

As for the prospects of exporting Russian LNG, our country is already selling it to China but in rather small quantities: only about 0.7 million tonnes were sold in 2018. It makes up a little over 1% of China's total imports and about 5% of Russia's exports, the expert added. China plans to practically double its consumption of natural gas by 2030 and the vast majority of this new demand will be met by imports. The International Energy Agency estimates that the country's imports may increase by over 150 billion cubic meters and that this increase may come in equal measure in the form of pipeline gas and LNG, and Mr Amiragyan is of the opinion that Russia can supply a lion's share of these added imports, especially when it comes to pipeline delivered natural gas.