Putin, Xi launch gas pipeline from Russia to northeast China

Russian President Vladimir Putin and Chinese President Xi Jinping.
Russian President Vladimir Putin and Chinese President Xi Jinping. Photo credit: Getty

Russian President Vladimir Putin and his Chinese counterpart Xi Jinping have overseen the launch of a pipeline to take natural gas from Siberia to northeast China, an economic and political boost to ties between Moscow and Beijing.

The start of gas flows via the Power of Siberia pipeline reflects Moscow's attempts to pivot to the East to try to mitigate pain from Western financial sanctions imposed over its 2014 annexation of Ukraine's Crimea.

The move cements China's spot as Russia's top export market and gives Russia a potentially enormous new market outside Europe.

It also comes as Moscow is hoping to launch two other major energy projects -- the Nord Steam 2 undersea Baltic gas pipeline to Germany and the TurkStream pipeline to Turkey and southern Europe.

The 3000-km-long Power of Siberia pipeline will transport gas from the Chayandinskoye and Kovytka fields in eastern Siberia, a project expected to last for three decades and to generate US$400 billion (NZ$615 billion) for Russian state coffers.

"This is a genuinely historical event not only for the global energy market but above all for us, for Russia and China," said Putin, who watched the launch via video link from the Russian Black Sea resort of Sochi.

"This step takes Russo-Chinese strategic cooperation in energy to a qualitative new level and brings us closer to (fulfilling) the task, set together with Chinese leader Xi Jinping, of taking bilateral trade to US$200 billion by 2024."

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

Flows via the pipeline are expected to gradually rise to 38 billion cubic metres (bcm) per year in 2025, possibly making China Russia's second-largest gas customer after Germany, which bought 58.50 bcm of gas from Russia last year.

Moscow began supplying natural gas to western and central Europe in the 1950s and Europe has long been Russia's major consumer of gas, supplied by Kremlin-controlled energy giant Gazprom, with total annual supplies of around 200 bcm.

The price China is paying for Russian gas in the new pipeline remains a closely kept secret with various industry sources saying it is tied to the price of an oil products basket.

Reuters

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