CONSTRUCTION of part of the Eastern Route of the Russia-China Gas Pipeline has started, following a ceremony held in Yakutsk, the capital city of Russia’s Sakha Republic, on 1 September.
Also known as the “Siberia Power” pipeline, the pipeline will start to transmit natural gas to China from 2018 for a period of 30 years – eventually transmitting 38 billion cubic metres of gas per year.
With a total length of 2,680km in Russia, the Eastern Route gas pipeline will enter China from Heihe in Heilongjiang Province, aiming at markets in the Beijing-Tianjin-Hebei region, the Yangtze River Delta, and northeast China.
The pipeline will transport gas from Gazprom, as agreed between the companies in May this year, with much of the gas to come from fields in eastern Siberia – an area which currently lacks export infrastructure, according to the US government-run Energy Information Administration (EIA).
The EIA said future phases of expansion could see the volume of gas transmitted increase to up to 60 billion cubic metres of gas per year.
This contract is the largest to date for Gazprom, which has a monopoly on pipeline natural gas export contracts made by Russia.
Two weeks after the ground breaking ceremony, CNPC announced the start of construction of the Tajikistan section of Line D of the Central Asia-China gas pipeline, with a ground-breaking ceremony held in the Tajik capital of Dushanbe on 13 September.
The pipeline will receive gas supply from the Galkynysh Gas Field in Turkmenistan, and be routed via Uzbekistan, Tajikistan and Kyrgyzstan to China, forming the Central Asia-China gas pipeline network together with Line A, Line B and Line C which are already operational.
Totalling 1,000 kilometres, with 840 kilometres outside China, Line D of the Central Asia-China Gas Pipeline has a designed annual deliverability of 30 billion cubic metres of gas.
CNPC said that by the time Line D is put into operation, natural gas export from Central Asia to China will be boosted to 85 bcm per year, a 30 bcm increase from the current total amount of 55bcm per year.
The company did not put a specific value on the project, but did say construction and operation of the Line D pipeline required a total investment of billions of US dollars, which it said would create tens of thousands of new jobs and promote the economic and social progress of the countries along the pipeline.
The Gazprom contract links the natural gas price to international crude oil prices and operates as a take-or-pay scheme – meaning CNPC must pay for the contracted natural gas even if it decides not to receive it.
Although China continues to import more LNG, the government is committed to expanding Chinese domestic production, which increases from 4 Tcf in 2012 to 10 Tcf by 2040 in the IEO2013 Reference case. Developing China’s shale gas reserves is also an important part of the government’s natural gas strategy, the EIA said.