Russia begins work on new gas pipeline to China

Nord Stream-2 is not yet completed, but Russian gas giant Gazprom has already started designing a new gas pipeline, which will transport Russian gas to China via Mongolia. On Monday, the head of Russia's Gazprom, Alexei Miller, announced the start of work on the Power of Siberia-2 gas pipeline.

"On behalf of the Russian President, Gazprom has started design and preparatory work on the Power of Siberia-2 gas pipeline. It could become a new export channel with a capacity of up to 50 billion cubic meters. Gas will go to China via Mongolia. Thus, gas from the Yamal Peninsula will be delivered to Europe and Asia," Miller said.

The transit pipeline through Mongolia with a capacity of up to 50 billion cubic meters per year, according to Miller, will also connect the gas transport infrastructures of the west and east of Russia and eastern Siberia, which does not have access to the main pipe.

The Power of Siberia, built after the signing of a 35-year contract for gas supply from Russia to China in 2014, has been in operation since December 2019. Gazprom and China's CNPC signed a contract in 2015 to supply gas to China through the "Power of Siberia-2" which is to run parallel with the "Power of Siberia."

In the fall of 2019, Putin asked Gazprom to analyze the new route. The pipeline was to pass from the Yamal Peninsula through Mongolia to China. It is not known why the route has been changed and expanded, and whether Mongolia will also receive Russian gas.

Preparatory work on the new pipeline begins amid falling gas prices. On the Dutch TTF exchange, the EU's largest gas trading platform, the price fell to $53.7 per 1,000 m3 on Monday. Gazprom considers the gas price to be profitable at $63. In reality, however, it needs at least $100 to pay for production and export duties.

  Power of Siberia, Gazprom, Russia, China