MOSCOW: Russia is reportedly planning to use supplies of natural gas from a third party to fill a crucial export pipeline to China.
Russia’s energy giant Gazprom has held talks with a small Siberian energy firm on using its gas to fill the pipeline to China if its own projects to produce and transport the gas are not ready in time.
Moscow and Beijin reached a deal in 2014 over supplies of 38 billion cubic meters per year (bcm/y) of gas from 2018. Both agreed to raise the volume gradually – what could eventually make China one of the biggest customers for Russia’s gas.
Reuters says the project has hit several key problems though. Gazprom, it says, has less money available to finance the scheme than it had expected because low world gas prices have hit its revenues. Also, sanctions imposed on Russia over Ukraine are making it hard for Gazprom to secure loans from the West, it added.
These problems have now forced the Russian energy giant to ask the privately-owned Irkutsk Oil Company, which holds large gas reserves in the region and some infrastructure, to pledge up to 7 bcm/y of gas for future supplies to China.
Gazprom, which has a monopoly on Russian gas exports, is treated by the Kremlin as a national champion. Therefore, for the world’s biggest gas company to seek help from a small independent to complete such a high-profile project would raise eyebrows in the industry, Reuters said.
Under the Gazprom project, two large gas fields in the far-flung regions of East Siberia, Chayanda and Kovykta, are designated as the principal source for the supplies to China.
Gazprom had valued total investments for the project at $55 billion, which includes the development of the fields and construction of a pipeline called The Power of Siberia which will take the gas to China.
