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Russia’s planned gas pipeline to China hit by construction delay

Published by , Editorial Assistant
World Pipelines,

Construction on the Kremlin’s long-planned mega-pipeline connecting Russia’s western gasfields with China is expected to be delayed, the Prime Minister of Mongolia has warned, in a blow to Moscow’s plans to secure a new market for the gas it previously sold to Europe.

The so-called Power of Siberia 2 pipeline, which will cross Mongolian territory, has been a priority for Moscow for more than a decade but gained even greater importance since Europe curbed its imports of Russian gas in response to the full-scale invasion of Ukraine in 2022.

Mongolia’s Prime Minister Luvsannamsrain Oyun-Erdene previously told the Financial Times that he expected construction of the 3550 km pipeline, including 950 km through Mongolian territory, to begin in 2024. Asked whether the partners will stick to that timetable, he said that Russia and China are yet to agree on critical details of the mammoth infrastructure project.

“Those two sides still need more time to do more detailed research on the economic studies,” Oyun-Erdene said in an interview, adding that record global gas prices during the past two years had complicated negotiations. “The Chinese and Russian sides are still doing the calculations and estimations and they are working on the economic benefits.”

Russian President Vladimir Putin and Chinese President Xi Jinping met at least twice last year, but while Russia has repeatedly emphasised its readiness to launch PS-2, Beijing has been conspicuously silent.

China already receives gas from eastern Russia through the first Power of Siberia pipeline, which began operating in 2019. It carried approximately 23 billion m3 of gas last year and is expected to reach full capacity of 38 billion m3 in 2025.

PS-2 would bring an additional 50 billion m3 of gas to China from fields in the Yamal peninsula in western Siberia, which previously served Europe. Russia’s state-owned Gazprom started a feasibility study for the project in 2020 and wants the pipeline to be operational by 2030. It hopes China can replace Europe as the biggest export market for its gas. Europe used to buy more than 150 billion m3 of Russian gas a year, but flows have dwindled since the February 2022 invasion.

Sergey Vakulenko, a former Strategy Director for Gazprom Neft and a Senior Fellow at the Carnegie Endowment for International Peace, said Russia was likely to be seeking better financial terms from China than it had achieved in the PS-1 contract, signed in 2014 when global gas prices were much lower.

China’s foreign ministry did not comment directly on the negotiations but said that natural gas is an important aspect of Sino-Russian energy co-operation.

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