One pipe is good, two is better. Moscow and Beijing struck a bargain

© RIA Novosti / Michael Clientgenerated in Photobacterium of the Russian Federation Vladimir Putin and Chinese President XI Jinping at a press conference following the meeting on the sidelines of the IV Eastern economic forumOne pipe is good, two is better. Moscow and Beijing struck a bargain© RIA Novosti / Michael Clientgenerated the image Bank

During a meeting with the President of Russia in the WEF XI Jinping instructed subordinates in the shortest possible time to coordinate all the formalities to start construction of the pipeline along the Western route «Altai», or, as it is called, «the Power of Siberia — 2». What volumes of supplies in question and the future prospects of energy cooperation of Russia and China — in the material RIA Novosti.

Pipe help

According to the Minister of energy of Russia Alexander Novak, all technical conditions for the construction of a new pipeline through the Altai Republic in the existing transport corridor has been agreed, remained «slightly agree». The head of the Ministry added that we are talking about the supply of 30 billion cubic meters of gas per year. For comparison: the contract between Gazprom and CNPC envisages pumping of under construction gas pipeline «Power of Siberia» of 38 billion cubic meters annually. It is assumed that some of the new branches, laid on the territory of Russia, will be longer by 450 kilometers.

«At the talks with President Putin, President XI Jinping announced that it has set the task in the shortest possible time to complete negotiation of the contract on gas supplies via the Western route», — said Novak at WEF.

On the construction of the pipeline along the Western route began in 2006, however, the framework agreement was signed only after eight years. Reason now asks Beijing to accelerate the implementation of the project is obvious — despite a trade war with the United States, the Chinese economy continues to grow rapidly. Accordingly, the rising and the energy demand: in 2017, gas consumption in China increased by 15% (to 237 billion cubic meters per year), and for the first half of 2018 by 17% compared to the same period last year.

This means that sooner or later even a new route through the Altai Republic will be small. According to experts, by 2030 consumption of natural gas in China will double and will reach 480 billion cubic meters per year. Given that domestic production is growing much slower, the only way to ensure a reliable supply of gas purchases in Russia.

«According to our medium-term forecasts, to 2035, the need to supply Russian pipeline gas to China will amount to from 80 to 110 billion cubic meters», — said Alexey Miller.
Roll up your sleeves

To maintain the status of a reliable energy supplier, Gazprom will have to increase production. This is what are doing now in Russian companies: according to Miller, this year the volume of extracted fuel will increase by almost five percent, to 495 billion cubic meters. While most analysts believe that the figure of 500 billion cubic meters can be surpassed.

However, the pipeline is not the only method of delivery of energy resources to China. Along with the development of a unified gas transmission system of the two countries, China is increasing its purchases of Russian liquefied natural gas (LNG). Last year, LNG accounted for 19% of the total export of blue fuel in the portfolio of Gazprom.

Other countries in the region are also expanding cooperation with the Russian gas-producing company. At a working meeting between Alexey Miller and the President of South Korea’s KOGAS EEF was announced very impressive numbers. This year, Seoul has increased its purchases of Russian LNG by almost 20%. If in 2017 the terminal of South Korea took 1.9 million tonnes of fuel from «Gazprom» in the first half of this year, the tankers from Russia has shipped 1.2 million tons.

The failed economic policies of Washington threatens the planned projects in the field of expansion of production and supply of LNG abroad. Although now the American gas companies feel the Asian market is good (at the moment the whole LNG from the US contracted by countries in the region), hopes to take first place for the supply of fuel gradually melt away.

By the end of 2019, the American capacity for the production of LNG is expected to increase threefold from 3.6 to 9.6 billion cubic feet per day (about 100 billion cubic meters per year). However, if, as projected, Russia will press the United States on the Asian market, resell liquefied natural gas Americans will be simply nowhere.

For example, in Europe, on which so much hope in Washington, the host terminal is loaded less than a quarter. And at the end of 2019, when the launch of «Nord stream — 2» the demand for American LNG in Europe will come to naught.