China and Russia build first giant gas pipeline

China and Russia build first giant gas pipeline

 For China, the pipeline runs down the east side of the country, passing through the capital Beijing and down to Shanghai. The middle phase starts operating in December 2020, and the distended southern part is to start gas deliveries by 2025, state media said. State-owned energy companies, Russia's Gazprom and China National Petroleum Corp., have been building the pipeline for about eight years. China and Russia are in the final stages of building the first giant gas pipeline that can transport gas from Siberia to Shanghai. 

It's nicknamed 'Power of Siberia' for the part located in Russia, which according to Chinese state media, has already started shipping natural gas to northern China. News of the Sino-Russian pipeline comes as Moscow faces the threat of losing its natural gas purchases from the European Union, a major customer that plans to cut two-thirds of Russian gas imports after the Ukraine war. China itself has been trying to diversify its energy sources. Beijing has refused to condemn Moscow for its unprovoked invasion of Ukraine in late February. China and Russia's gas pipelines show it is just one of many energy options for Beijing. Although Russia has reportedly invested $55 billion into its pipeline deal with China, imports of natural gas through the pipeline totaled only $3.81 billion. 

This data is based on Chinese customs property as of June 2022, accessed via Wind Information. Meanwhile, the pace of Chinese purchases increased in the first half of this year, almost tripling from last year to $1.66 billion. According to Chinese media, the “Siberian Power” – as the part located in Russia is called – started delivering natural gas to northern China in December 2019. By volume, Gazprom's gas exports to China via pipeline rose 63.4 percent to 7.5 billion cubic meters during the first half of the year, according to the Russian news agency Interfax. The initial deal aimed for 38 billion cubic meters in annual shipments over the next few decades. The Interfax report said Gazprom's overall exports to countries not previously part of the Soviet Union fell 31% to 68.9 billion cubic meters in the first six months of this year. 

In early February, China and Russia expanded their annual gas purchase agreement by 10 billion cubic meters — they didn't specify when that would happen but said it was a "long-term agreement." Reuters estimates additional sales of $37.5 billion over 25 years.
The two countries have discussed building additional gas pipelines, including one that is expected to flow from Siberia through the country of Mongolia. The Financial Times reported this month that Mongolia expects the new gas pipeline, known as “Power Siberia 2,” to begin construction within two years. Both China and Russia are also collaborating on the development of nuclear power.

 In May 2021, Chinese President Xi Jinping and Russian President Vladimir Putin spoke virtually at the groundbreaking ceremony for a joint construction project at two nuclear power plants in China. Most of China's energy still comes from coal, most of which is produced domestically. But in recent months China has been buying more Russian coal, which is selling at a discount as many other countries plan sanctions against the commodity.

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