Gazprom plans to link its Arctic gas fields in Yamal to China

The Power of Siberia 2 pipeline is set to move forward.

By Atle Staalesen, The Independent Barents Observer - April 2, 2020
Russian natural gas giant Gazprom has plans for a major pipeline connecting the company’s Arctic fields with markets in China. (Gazprom via The Independent Barents Observer)

Gazprom leader Aleksey Miller in last Friday’s meeting with Russian President Vladimir Putin confirmed that building new eastbound natural gas infrastructure now is high on the Russian gas company’s agenda.

The plans come as Gazprom’s current key markets in Europe gradually turn away from traditional hydrocarbons and towards alternative energy sources.

Partnership with China

Putin and Miller also discussed natural gas exports from Yamal to China in a meeting in September 2019. Then, Putin made no doubt that he wanted to see deliveries of natural gas from the Yamal Peninsula to the Asian country. A new delivery route can be made through Mongolia, Putin argued.

“Please have a look at the resources in Yamal, so that the necessary volumes can be delivered on a western route to China via Mongolia,” Putin requested. “I know that the route is complicated, but preliminary assessments of the issue have shown that it is fully realistic, and our Chinese partners also tend to think so,” he added.

Now, Miller and Gazprom come to the Kremlin with the positive response that Putin wants.

According to the company leader, up to 50 billion cubic meters of Russian natural gas can annually be delivered to the western parts of China through the Power of Siberia 2, a more than 6,000-kilometer pipeline that is projected to run through Mongolia.

Preparing for investments

Gazprom is now ready to enter a project pre-investment phase, Miller told the President.

“I would like to ask you to issue an instruction to start the pre-investment phase, in order to commence the development of a feasibility study and the design-and-survey works for the Power of Siberia 2 gas pipeline,” Miller said.

“Yes, of course. Agreed,” Putin responded.

The vast reserves of the Yamal region that will serve as source of the east-bound exports. Several more fields are under development in the remote Arctic area, among them the Kharasaveyskoye field, which is due to start production in 2023.

Yamal is already by far Russia’s most important region for natural gas production. In 2012, Gazprom launched its Bovanenkovo fields, which today produce up to 115 billion cubic meters per year.

However, the Bovanenkovo, like most of the country’s other oil and gas fields are built for exports to Europe and western markets.

East-west connection

Building the Power of Siberia 2 link will connect the current westbound pipeline grid with a new eastbound grid and consequently open a new route for Russian energy exports.

According to Miller, the natural gas will also be applied to meet energy needs in eastern Russian regions.

And the whole thing will be profitable, the powerful natural gas leader underlines.

“A preliminary feasibility analysis has been carried out; it has shown that the project is feasible and cost-effective.”

Gazprom in 2019 produced a total of 500.1 billion cubic meters of natural gas, of which 199.3 billion was exported. The company in the period provided 35.6 percent of European natural gas consumption.