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Russia: a changing superpower (part 2)

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World Pipelines,

As discussed in part 1, Moscow has taken steps to expand its exports, resulting in two major piped gas projects to China (68 billion m3/y). Simultaneously, it is seeking to maintain and expand its share of the EU market through the Turkish Stream, which is in progress according to the Russians.

The following account highlights these gas pipeline projects, reflecting the growing eminence of this fuel as a cheaper and less pollutive alternative to oil.

The East Route Gas Pipeline

The Russian-Chinese Gas Pipeline (38 billion m3/y) is Russia’s and China’s largest and most important ongoing pipeline project. The pipeline is just a component of a comprehensive Russian-Chinese energy deal described by the Russians as their largest one ever (US$400). It involves constructing a gas transportation system in each country to be connected at a border point, and will sell gas to China for 30 years (38 billion m3/y).

The Power of Siberia GTS (POS)

The Russian pipeline for exporting gas to China designed to facilitate gas transportation from the Irkutsk and Yakutia gas production centres to extend through the existing pipelines in eastern Siberia and end in Russia’s Far East (Port of Vladivostok) and also China. As a joint venture of CNPC and Gazprom, the POS (approximately 4000 km; 52 in.; 61 billion m3/y) is being built along the ESPO’s route.

China launched the construction of its extension on 30 June 2015. Welding on the first joint of the pipeline near the Chinese city of Heihe in the northern province of Heilongjiang bordering Russia initiated the project after Russian Prime Minister Dmitry Medvedev and Deputy Prime Minister of the State Council of China Zhang Gaoli announced the construction through video.

China will start receiving Russian gas in 2018 when the entire East Route Gas Pipeline is scheduled to be fully operational. The imported gas will mainly supply China’s Northeast, Beijing-Tianjin-Hebei area and the Yangtze River Delta region to help meet increasing energy demand for cleaner energy than coal and improve air quality. The annual use of 38 billion m3 of natural gas instead of coal will cut CO2 emissions by 163.78 million tpy.

The West Route Gas Pipeline

The Russian-Chinese Gas Pipeline includes a western route through the Power of Siberia-2 route, previously known as the Altay route. With a projected annual delivery of 30 billion m3 of gas to China for 30 years beginning 2019, the pipeline is meant to almost double China’s piped gas imports from Russia for which Gazprom Chairman Alexey Miller and CNPC Chairman Zhou Jiping signed a Framework Agreement on 9 November 2014 in Beijing.

While its specifics are not known, the approximately 2600 km pipeline is suggested to connect the compressor stations south of Novy Urengoi in the Yamal-Nenets Autonomous Okrug and across Russia’s Republic of Altai to China. However, its construction was ‘delayed indefinitely’ in July 2015 according to Russia as China was ‘reviewing its energy needs due to the economic slowdown’ and the availability of more LNG, including from Australia, presumably at a cheaper price than before. However, Russia is still working to finalise the deal as, according to Russian Deputy Prime Minister Arkady Dvorkovich, the negotiations on the pipeline were underway.

Nord Stream II

Deputy Chairman of the Gazprom Management Committee Alexander Medvedev and Member of the BASF Board of Executive Directors Hans-Ulrich Engel signed a MoI in Berlin on 6 August 2015 for a new twin-line system via the Baltic Sea: the Nord Stream II (55 billion m3/y).

Supplying Germany and a few other EU countries via that country with Russian gas through the Baltic Sea, the Nord Stream, now the Nord Stream I, became fully operational when its second line was completed in 2012.

The MoI followed the June 2015 MoI among Gazprom, E.ON, Shell and OMV on constructing the Nord Stream II. It is unknown whether these MoIs will develop into a deal for constructing the pipeline given the current status of Russian-EU relations.

The Turkish Stream Gas Pipeline

Alexey Miller and Botas Petroleum Pipeline Corporation’s Chairman Mehmet Konuk signed in Ankara a MoI in December 2014 to construct an offshore gas pipeline across the Black Sea toward Turkey. Russian President Vladimir Putin and Turkish President Recep Erdogan attended the event. The project reveals a Russian plan to realise its objective of increasing gas exports to the EU through the cancelled project by a different means to bypass Brussels’ required approval for such export.

The pipeline (63 billion m3/y) is meant to provide Russian gas exports to Turkey (14 billion m3/y) and to Greece (47 billion m3/y) for which Russia seems to be planning to use the resources allocated to the South Stream.

It is unclear whether the pipeline will become operational in December 2016 as planned, as the construction for the pipeline has been suspended due to Turkish air forces downing a Russian warplane over the Turkish-Syria border on 24 November.

The North-South Gas Pipeline

The Russian government approved on 10 August a draft agreement between Russia and Pakistan for co-operation on the North-South Gas Pipeline’s (NSGP) construction between Karachi and Lahore in Pakistan. Being valid for 25 years and subject to automatic extension for five year terms, the project is noteworthy as an example of Russia’s expanding into the Asian pipeline construction projects. The Russian Ministry of Energy and the Pakistani Ministry of Petroleum and Natural Resources will oversee and co-ordinate its implementation.

According to the Russian government, Russia will provide technology, materials, equipment and products, added to the participation of its research, design and construction entities, while Pakistan will ensure the rights for the use of land plots, for carrying out surveys and work related to determining the route for the pipeline.

Written by World Pipelines' correspondent Dr. Hooman Peimani, and edited from published article by Stephanie Roker

To read the full version of this article, please download a copy of the October 2015 issue of World Pipelines.

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