Power of Siberia controversies

There are some rather large controversies in estimates of gas volumes that will be exported via this pipeline from Russia to China:

1. In 2023, gas supplies via the Power of Siberia gas pipeline to China are planned at the level of 22 billion cubic meters, Russian Deputy Prime Minister Alexander Novak said earlier in 2022. The Power of Siberia will reach the declared level of 38 billion cubic meters in 2027, he noted. Previously, it was assumed that it would be possible to ensure supplies in such a volume as early as 2024.

2. This estimate clearly contradicts to earlier published one: "the connection at the beginning of 2023 of the Kovytka field, near Lake Baikal, to the Power of Siberia will contribute significantly to this increase. In 2025 - the year the pipeline will reach maximum capacity - more than 61 billion m³ of Russian gas will be carried to China".

3. As reported on 30th September 2022, Gazprom resumed gas supplies to China via Power of Siberia. The export capacity of the main gas pipeline is 38 billion cubic meters of gas per year, it is planned to reach its full capacity by 2025.

Gazprom has resumed gas supplies via the Power of Siberia pipeline to China. This was reported in the official Telegram channel of the Russian holding.

On September 22, scheduled maintenance work began on the gas pipeline. They ended on the 29th. According to an agreement with the Chinese company CNPC, repairs are carried out annually - in spring and autumn.

"Scheduled maintenance work on the Power of Siberia gas pipeline has been completed. Gas transportation, as planned, has been resumed today," the statement said.

Deliveries of Russian gas to China in January-August 2022 increased by 60% and are regularly delivered in excess of the daily quantities established by the contract. In 2021, Gazprom supplied 10.39 billion cubic meters of gas to Power of Siberia. And from 2023, the Russian holding plans to further increase the volume of gas supplies to China under existing contracts. By the way, the export capacity of the gas pipeline is 38 billion cubic meters of gas per year. It is expected to reach the design capacity by 2025.

Earlier it was reported that in 2024 the construction of the Power of Siberia-2 gas pipeline could begin. The work is scheduled to be completed in 2029. Recall that the first branch was put into operation in 2019.

So, 10.39 in 2021, but what's next: 38 in 2027, or 38 in 2025, or 61 in 2025?

China: Turkmenistan gas vs Russian

14 October 2022.

The former Soviet republic is likely to compete with Russia on the gas market of China.

Turkmenistan may almost double gas exports to China.

Turkmenistan is going to almost double gas exports to China, TASS reports citing local media. Thus, the former Soviet republic can squeeze Russia in this market.

The commissioning of the fourth branch of the Turkmenistan-Uzbekistan-Kazakhstan-China gas pipeline will increase the supply of Turkmen fuel to China to 65 billion cubic meters per year. So far, the pipeline consists of three lines. Turkmenistan last year supplied about 34 billion cubic meters of gas to China, becoming the largest exporter of this type of fuel to the country. With the commissioning of the fourth line, gas exports to China may soar by 1.9 times.

Also, agreements were reached at the highest level regarding the development of the second stage of the Galkynys field, which serves as one of the raw materials sources of the Turkmenistan-China gas pipeline.

In 2023, gas supplies via the Power of Siberia gas pipeline to China are planned at the level of 22 billion cubic meters, Russian Deputy Prime Minister Alexander Novak said earlier. The Power of Siberia will reach the declared level of 38 billion cubic meters in 2027, he noted. Previously, it was assumed that it would be possible to ensure supplies in such a volume as early as 2024.

This estimate clearly contradicts to earlier published one: "the connection at the beginning of 2023 of the Kovytka field, near Lake Baikal, to the Power of Siberia will contribute significantly to this increase. In 2025 - the year the pipeline will reach maximum capacity - more than 61 billion m³ of Russian gas will be carried to China".

Australian LNG exports to China vs Power of Siberia

As reported by AFR in August 2021, Australian exports of liquefied natural gas to China defied trade tensions between the two nations to reach a record in 2020-21, with China for the first time overtaking Japan as Australia’s largest LNG customer.

Shipments to China jumped 7.3 per cent to 30.7 million tonnes in the year to June 30, 2021, despite strong competition, according to a monthly report from consultancy EnergyQuest, citing import statistics from major buyers.

The trade with China contributed to a record 72.4 million tonnes of LNG exports by Australia to north Asia in 2020-21. It was worth about $15.6 billion, out of a total $38.9 billion trade with the region. The regional total was down from $49.9 billion in 2019-20 due to a drop in oil prices, which most of the sales are priced against, the firm noted.

Fears mounted in2021 that the souring of relations between Australia and China was spilling over into LNG after unconfirmed reports that at least two of China’s smaller LNG importers had been told by authorities to avoid buying extra cargoes from Australia.

However, the data from EnergyQuest supports commentary from Australia’s LNG exporters including Woodside Petroleum and Santos that appetite from China for cargoes remains strong. EnergyQuest CEO Graeme Bethune has consistently pointed to a lack of gas for processing into LNG at several Australian plants as the biggest threat to exports, rather than trade tensions with China or emissions reductions targeted by major Asian nations such as Japan.

As we have reported earlier, combined volume of gas exports to China from Russia via Power of Siberia - 1 and Power of Siberia - 2, when and if they reach full capacity, may reach 111 Bln cubic metres (equivalent of around 80 mln tons LNG).