‘Power of Siberia’: Top 10 Facts About Russian-Chinese Energy Megaproject

Nellie Chapman
December 4, 2019

The Russian-Chinese natural gas pipeline Power of Siberia will launch on 2 December during a joint teleconference between Russian President Vladimir Putin and his Chinese counterpart Xi Jinping, the Russian head of state's press secretary confirmed this week.

For Russia, natural gas exports to China are a way to boost the economy as the country faces financial sanctions from the West due to its annexation of Crimea.

The new pipeline emerges in Heilongjiang, which borders Russian Federation, and goes onto Jilin and Liaoning, China's top grain hub.

China is now the world's largest natural gas importer and the second largest liquefied natural gas (LNG) importer.

Russian Federation and China signed a 30-year, US$400 billion (S$547 billion) deal for its development in 2014, in the biggest ever contract for Gazprom.

To achieve that, Russian Federation launched a major oil pipeline to China, which today ships 600,000 barrels per day (bpd), and opened a new port at Kozmino on the Pacific.

Russian Federation is widely seen as the top defense competitor with the USA, and China was ranked as its main economic rival. "In general, the prospects are quite large, Gazprom has an extensive natural base in Eastern Siberia, so now it's up to the growing demand in China and China's pricing policy acceptable for Russia", Alexei Kokin emphasized.

The 3,000-kilometre (1,850-mile) pipeline - which Putin has called "the world's biggest construction project" - will supply China with 38 billion cubic metres (1.3 trillion cubic feet) of gas annually when fully operational in 2025.

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The pipeline now reaches as far as Jilin and Liaoning, but was reportedly projected to eventually extend into Beijing and Shanghai. The total price tag for three decades is expected to be about 20% less than the $400 billion initially disclosed, if natural gas prices remain weaker than the level when the deal was struck, according to an industry insider.

The surge in supply from new projects in Australia and the United States this year, coupled with slower demand growth in China, has already resulted in the spot price in Asia dropping to its lowest for this time period on record.

The pipeline launch further solidifies the alliance between Beijing and Moscow in energy.

Meanwhile, Lin said that US companies continue to suffer "substantial losses" as exports the commodity from the U.S.to China since April has dropped to zero. They also co-chaired the sixth meeting between China and Russian Federation on institutional cooperation in law enforcement and security.

With its trade war with Washington dragging on, Beijing had been scrambling to find energy suppliers other than the US, a key LNG seller.

Alexey Belogorey, deputy executive director on energy studies of Russia's Institute for Energy and Finance Foundation, said this in a recent interview with Xinhua.

Russian Federation began seeking alternative economic partnerships after the USA and European Union imposed sanctions over its annexation of the Crimean Peninsula in March 2014.

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