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Russian gas pipeline from Siberia to Shanghai now functional

BEIJING – China and Russia are in the final stages of building the first gas pipeline that can transport gas from Siberia to Shanghai.

“Power of Siberia” – as the part located in Russia is called – began supplying natural gas to northern China in December 2019, according to Chinese state media.

In China, the pipeline runs along the eastern side of the country, past the capital Beijing and down to Shanghai. The middle phase began operations in December 2020, and the final southern section is due to begin gas deliveries in 2025, state media said.

The state-owned energy companies, Russia’s Gazprom and China National Petroleum Corp., have been building the pipeline for about eight years.

The China-Russia pipeline comes as Moscow faces the threat of losing gas purchases from the European Union, a major buyer that aims to cut two-thirds of Russian gas imports as a result of the Ukraine war.

China is trying to diversify its energy sources. Beijing has refused to condemn Moscow for its unprovoked invasion of Ukraine in late February.

The scope of the China-Russia pipeline suggests that it is just one of many energy options for Beijing.

Although Russia has reportedly invested $55 billion in its pipeline deal with China, natural gas imports through the pipeline have reached only $3.81 billion since December 2019, according to June data from Chinese customs authorities accessed by Wind Information.

The pace of Chinese purchases accelerated in the first half of this year – nearly tripling from a year ago to $1.66 billion, data show.

But China’s gas imports from Turkmenistan during that time were much higher at $4.52 billion, up 52% ​​from a year ago, the data show.

Natural gas remains a tiny fraction of China’s energy imports, which are mostly oil.

The volume of Gazprom’s gas exports to China through the pipeline increased by 63.4% to 7.5 billion cubic meters during the first half of the year, Russian news agency Interfax reported. The original agreement aimed for an annual supply of 38 billion cubic meters over the coming decades.

An Interfax report said Gazprom’s total exports to countries that were not formerly part of the Soviet Union fell 31% to 68.9 billion cubic meters in the first six months of the year.

In early February, China and Russia expanded their annual gas purchase agreement by 10 billion cubic meters – they did not specify when this would happen, but said it was a “long-term agreement”. Reuters estimated additional sales worth $37.5 billion over 25 years.

The two countries have been in talks to build more gas pipelines, including one that would run from Siberia through Mongolia. The Financial Times reported this month that Mongolia expects the new pipeline, known as “Power of Siberia 2,” to begin construction within two years.
Nuclear power and coal

China and Russia are also working together to develop nuclear energy.

In May 2021, Chinese President Xi Jinping and Russian President Vladimir Putin spoke virtually at a groundbreaking event for joint construction projects at two nuclear power plants in China.

Much 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 being sold at a discount, as many other countries plan sanctions on the commodity.

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