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Russia’s alternative to Nord Stream 2, a gas pipeline to China
China and Russia are nearing the completion of a new pipeline that would send gas from Siberia to Shanghai. The pipeline on the Russian side is called ‘Sila Sibiri’ or the ‘Power of Siberia’.
Russias Energy Minister Alexander Novak earlier this year confirmed Moscows plans to will replace the damaged Nord Stream 2 gas link to Europe with its Asian project with China. Russia began supplying natural gas to China in December 2019, as part of a $400 billion contract struck in 2014 by Russian gas giant Gazprom and China National Petroleum Corp. This contract was signed for a period of 30 years. By 2021, Russia had already supplied 10 billion cubic meters worth of natural gas to China. These gas supplies from Russia had been used in Northeast China’s Heilongjiang Province, Beijing, and Tianjin.
Now, China and Russia are nearing the completion of a new pipeline that would send gas from Siberia to Shanghai. The pipeline on the Russian side is called Sila Sibiri or the Power of Siberia.
This new pipeline (3,000 km long) will connect East Siberia to Shanghai in Eastern China. The initial test flows will begin on October 25 with the flows being used to pressure test the pipeline connectors.
The pipeline goes along the eastern edge of China, via the capital city of Beijing, and all the way to Shanghai. The middle phase began operations in December 2020, while the final southern part is scheduled to begin gas delivery in 2025, according to Chinese state media.
While Gazprom and the China National Petroleum Corp. have been partnering since 2014, no one would have prophesied the significance of the line in 2022. Today, Russia is at risk of losing natural gas delivery contracts from the EU (European Union) and the associate countries over the annexation of Ukraine. This may impact 2/3rds of its total gas purchases. On the other hand, China has been having a hard look at sourcing its energy resources from multiple channels and providers.
While the gas supplies have been going on since 2019, the volume has only now accelerated, post the Russian war on Ukraine. This looks to be a very gamed strategy by China to leverage Russias weaknesses. China also has the option of importing natural gas from another supplier, Turkmenistan which supplies a higher volume to China.
China and Russia have also been in discussions to build another pipeline that will probably run through Mongolia further reducing the overall cost and time of transportation of natural gas. While the Power of Siberia 1 line runs until Vladivostok of Russia (East of China), the new line can bisect the overall region by running through Mongolia. The new dedicated line will start from the Yamal-Nenets region via Mongolia to China and can handle transportation of up to 50 Bcm per annum of gas and will be called Sila Sibiri 2 or Power of Siberia 2. If everything goes well, the construction activities may start at the end of 2024 or early 2025 and may only be completed by 2030.
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