Published: Wed, December 04, 2019
Global News | By Blake Casey

China, Russia Hitch Giant Gas Pipeline as Part of $400 Billion Deal

China, Russia Hitch Giant Gas Pipeline as Part of $400 Billion Deal

On Monday, Chinese and Russian Presidents Xi Jinping and Vladimir Putin inaugurated the first cross-border pipeline between their countries, called the "Power of Siberia". China passed Japan as the world's largest importer of natural gas past year, when it imported 125.35 billion cubic meters of the 276.6 billion it used, according (link in Chinese) to CNPC.

"This is the first gas pipeline from Russian Federation to China", RIA Novosti quoted Alexey Grivach, deputy director-general of Russia's Energy Security Fund, as saying on Monday, citing radio Sputnik.

Russian Federation has 20% of the world's gas reserves and accounts for 17.3% of global gas production, supplying almost 21% of Europe's pipeline gas imports.

The pipeline has a 3,000-km section in Russian Federation, known as the Power of Siberia, and a 5,111-km stretch in China. The new pipeline, named "Sila Sibiri (The Power of Siberia)", connects a city in northeastern China with the Chayandinskoye field in Yakutia and the Kovyktinskoye field in the Irkutsk Region.

They spoke on phone Monday afternoon after witnessing the launch ceremony of the China-Russia east-route natural gas pipeline, Chinese state media reported.

The pipeline is the outcome of a 30-year agreement (of US$ 400 billion) signed in May 2014 between the Russian government-owned Gazprom with the Chinese government-owned China National Petroleum Corporation (CNPC) to supply Russian gas to China via the eastern route. The pipeline crosses wetlands, mountainous terrain and seismically active territories, along with areas with permafrost and rocky soils.

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The pipeline, he continued, "takes Russia-China energy cooperation to a whole new level and brings us closer to achieving the goal set together with Chinese President Xi Jinping of extending bilateral trade turnover to $200 billion in 2024".

Xi said the project "serves as a model of... mutually beneficial cooperation between our countries".

Work has also been completed on the first road bridge between Russian Federation and China, further linking the two neighbours.

The Nord Stream 2 pipeline, being constructed by Gazprom and European partners, is more than 80% complete and due to begin operations in the middle of next year.

China is the world's largest energy consumer and demand for natural gas is increasing in the country, especially in the northern part, as it gradually moves from burning coal to cleaner energy for central household heating in winter.

In the coming year, the gas flow in the Power of Siberia pipeline to China will be limited, amounting to 4.6 billion cubic meters in 2020, according to Gazprom, and rising to 10 billion cubic meters in 2021. But Gazprom has declared its ambition to provide 38 billion cubic meters to China by 2025 and to supply a quarter of China's liquefied natural gas imports by 2035.

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