Making Connections
China Starts Constructing Gas Pipeline to Russia

The massive project to connect a gas pipeline between Russia and China is officially underway, as Chinese state-owned hydrocarbon firm CNPC recently announced it had begun work on the Power of Siberia pipeline. Reuters reports:

China’s CNPC, Gazprom’s partner on the project, said its pipeline company had signed an agreement with CNPC’s pipeline project team on building a portion of the Russia-China eastern gas pipeline starting from Heihe on the border and running to Changling in Jilin province.

The report, posted on the company’s website last week, said it marked “the start of the execution stage from preparation phase”.

Russia is working on building out pipeline infrastructure and its own gas fields as part of the $400 billion deal Moscow and Beijing signed just over a year ago. Under that deal, China will annually receive 38 billion cubic meters (bcm) of gas for 30 years, starting just four short years from now.

The pipeline will extend to China’s east coast, but the two sides are working to finalize a second gas deal for a western route through the restive Xinjiang province. This framework agreement was signed last November and, if inked, would send an additional 30bcm of natural gas China’s way. Earlier this year both sides expressed a desire to expedite negotiations, though recently talks seem to have stalled over disagreements over price and “mutual distrust.”

China and Russia may make for uneasy partners, but both stand to benefit from this new energy relationship—Beijing gets an overland supply of natural gas, a cleaner alternative to the coal that’s wreaking havoc on its air quality, while Moscow gets a new customer just as the West is seeking to wean itself off of Russian gas. Problems may exist for the second deal, but the first is well underway.

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