Russian gas supplies to China have set new records since the beginning of the year (Shutterstock)

Russian gas supplies to China have set new records since the beginning of the year, and experts expect the Power of Siberia pipeline to exceed planned export growth targets for this year, Russian newspaper Vzglyad reported.

A report by the newspaper stated that Gazprom updated its supply record to China 4 times in one month. Daily deliveries via the Power of Siberia pipeline on January 1, 3, 12 and 31, 2024 set historic records.

Last year, supplies through this line increased one and a half times from 15.4 billion cubic meters to 22.7 billion cubic meters, and in the same period, Gazprom also repeatedly set records in supply volume.

According to this year's plan, exports should grow to 30 billion cubic meters, but experts expect more.

Alexei Gromov, Deputy Director General of the Science Department at the Institute of Energy Strategy, said, “We will try to move forward within the deadlines this year, and by the end of this year we will achieve a record Another, and we will reach between 32 and 33 billion cubic metres, and it is expected that the “Quwa” pipeline will reach Siberia" to its capacity of 38 billion cubic meters per year in 2025.

Given the loss of the European sales market, it would be beneficial for Gazprom and the Russian budget to increase supplies to a maximum of 38 billion cubic meters this year, although this year is unlikely.

"Why can't we supply more gas along this route? Firstly, there is a certain technological process to increase gas supplies from the fields. Secondly, there is a plan to equip the fields themselves connected to the gas pipeline of the Siberian Power network. And unlike Siberian Power 2, it depends Power of Siberia pipeline on new fields.

Record numbers

Vzglyad quoted Igor Yushkov, an expert at the Financial University of the Russian Government and an expert at the National Energy Security Fund, as saying, “There is an opportunity to obtain more gas via pipelines from Russia... We are producing more, and the production capacity of the Siberian Power Line is increasing. On the other hand, China began consuming larger quantities of gas compared to last year. Last January, the price of Russian gas became attractive to China, because according to the contract concluded with China, the price of gas is linked to the cost of oil and petroleum products in the Asian market with a difference of 9 months. Before this period, there was A decrease in gas prices, which is reflected in the cost of gas at the present time.”

For his part, Gromov says, “China receives our gas through the Siberian Power gas pipeline at very reasonable prices. This is perhaps the cheapest source of gas pipelines to China at the present time, and it was so in 2023. According to our estimates, gas was sold through the Siberian Power pipeline at the end of the year.” last at an average price of less than $300 per thousand cubic metres. This was cheaper than supplies from the same gas pipeline in Central Asia at a price of $350 to $370 per thousand cubic metres. Therefore, China submitted a request to Gazprom's management to increase gas pumping through "Power of Siberia gas pipeline, as technically possible."

The newspaper quoted the head of the giant Russian Gazprom Group, Alexei Miller, as saying that it is strange that Gazprom and China have not signed a contract to supply gas through the new “Power of Siberia 2” gas pipeline, so that the Chinese remain silent about this project.

For its part, Mongolia, through which the pipeline will pass, officially announced that negotiations on the project are still ongoing, and it was previously said that the construction of the gas pipeline should begin in 2024, and it requires signing a commercial contract, without which no one will accomplish anything.

But Gromov doubts the possibility of signing such an agreement in the first half of this year, because the head of Gazprom, Alexei Miller, confirmed at the end of the year his intention to increase gas supplies to China through the Power of Siberia and the Far East project, without mentioning the “Power of Siberia 2” project. ".

As for Yushkov, he says, “The two parties cannot agree on the price. China believes that the longer it waits for the new line, the worse things will be for Gazprom, which means that it will be more accommodating of the price.”

Gromov returned to say, “(Siberian Force 2), in contrast to (Siberian Force), does not constitute a strong priority for China for several reasons. The Siberian Force line and the Far East Corridor reach the northeastern part of China, where there is no alternative to Russian pipeline supplies.” .

Although China obtains gas from Central Asia at a price ranging between $350 and $370 per thousand cubic meters, compared to $300 for Russian gas via the “Power of Siberia” line, China enjoys additional cash income from projects in Central Asia.

“China does not buy Central Asian gas, but also participates in its production projects in these countries, for example in Turkmenistan,” he said. “Moreover, the pipeline system was built with Chinese loan money. Therefore, China still receives loan payments from Central Asian countries.” In the form of gas imports. As for the Russian project, it is based solely on buying and selling gas.”

Long term demand

In addition, the Power of Siberia 2 project requires China to invest in infrastructure on its territory, while realizing that it will have long-term demand for this gas, which will begin flowing into its territory no later than 2030.

The newspaper indicated that political events may accelerate the signing of the contract between Gazprom and China regarding a new gas pipeline, knowing that shipping problems in the Red Sea, due to the escalation of the conflict in the Middle East or the intensification of the trade confrontation between China and the United States, could lead to an interruption. LNG supplies to China.

Source: Russian press