Gas for Europe to Asia: Gazprom seeks global control of gas routes

Gazprom plans to control gas supplies on a global scale and, if necessary, redirect the gas streams from Europe to Asia.

“Gazprom has plans to connect Western Siberian fields and our gas transportation system with the system that is developing in the Far East,” Russian President Vladimir Putin said at a meeting with investors of the Far East Federal District today. “These are not just plans; they really begin to design this work.” The president linked this work to the "internal needs of the Far Eastern regions" and Gazprom’s desire "to expand its export market." In his words, Russia will easily switch gas streams to the East in case there are "any difficulties in Europe."

Experts say Gazprom will be able to supply the “European gas” to Asia in the near future.

“Connection of the gas transportation system with the one that is developing in the Far East is envisioned by the development strategy of the country’s energy sector for 2030,” says Alexey Grivach, deputy director of the National Energy Security Fund. “However, it is so far senseless to build a gas pipeline to Irkutsk. Russia has only one heavy consumer of pipeline gas in Asia. It is China. I think, the president was speaking about the construction of Power of Siberia-2 pipeline (former Altay) in the near future to supply gas to China from the West Siberian fields. Gas to Europe is supplied from there too. Actually, the Power of Soberia-2 will enable Gazprom to redirect part of the gas to China.”

The expert does not think that they plan to supply the greatest part of the gas stored for European consumers to Asia.

“The relations of Russia and Europe are uneasy now, but the European market is large and the Russian gas supplies ensure the energy security of both the EU and Russia,” Alexey Grivach says. “Therefore, the construction of the Power of Siberia-2 diversifies consumption from the fields of Western Siberia. The Power of Siberia project that will supply gas to China and Far East has its resource base in Irkutsk region and Yakutia. So, the Far East will have its own sources of gas supply and there is no need to build a single gas transportation system at the moment.”

Last year, Gazprom supplied 159billion cubic meters of gas to Europe. The annual gas supply to China will make up some 100billion cubic meters, if all the three projects are implemented - the Power of Siberia – 38billion cubic meters, Power of Siberia-2 and Sakhalin-3 – by 30billion cubic meters.

Power of Siberia: In 2014, Gazprom and Chinese CNPC signed an agreement of gas supply from the Yakutsk and Irkutsk gas production centers - the Power of Siberia gas pipeline project. The future pipeline will be running for about 3,000km. The 30-year contract provides for annual supply of 38billion cubic meters of gas. The pipeline will supply gas to Russia’s Far East since the pipeline will be running through the southwest and south of the region.

Commenting on the construction process of the Power of Siberia pipeline, Anatoly Titov, Director General of Gazprom Transgaz Tomsk told Interfax today that more than 1,100km area has been cleaned and the whole scope of work has been completed on more than 200km of area. Actually, the construction of the 9% of the first pipeline is over.

Power of Siberia-2, the former Altay project, is the second gas pipeline to Russia – from the fields in West Siberia to the west of China where the pipeline may be connected to the East-West gas pipeline that is running up to Shanghai in the southeast of China. The Power of Siberia-2 will be running about 6,700km. Although the launch of the project was announced in 2006, the construction activities have not started yet. The negotiations intensified in 2014 when Gazprom and CNPC signed an agreement of gas supply via the western route.

The third route is the gas supply from the Sakhalin shelf. In September 2015, Gazprom and CNPC signed a Memorandum of Understanding on the project of pipeline gas supply from the Far East. The project will help supplying up to 30billion cubic meters of gas to China per year. The basic source of the project is the Kirinskoye Field with 700bilion cubic meters of gas reserves. Despite the U.S. sanctions on the field, Vsevolod Cherepanov, Head of Gazprom’s Department 307, told Interfax the pipeline will be put into service in 2019. “We have not changed the date so far. The pilot project is envisaged for the beginning of 2019,” he said.