Gazprom Accelerates Pipeline Gas Transports To China

By Julianne Geiger of OilPrice.com

Russia is accelerating its natural gas exports to China through the Power of Siberia pipeline, aiming to hit maximum capacity by the end of 2024—a full year ahead of schedule. Gazprom, Russia’s state-run energy giant, has agreed with China National Petroleum Corporation (CNPC) to boost December supplies, reaching the pipeline’s designed capacity of 38 billion cubic meters (bcm) annually.

This increase in gas flows reflects Russia’s pivot towards China, as Moscow seeks to replace lost European buyers following its invasion of Ukraine. Gazprom has already ramped up deliveries, shipping 20.8 bcm in the first eight months of 2024, according to Bloomberg calculations, closing in on last year’s total of 22.7 bcm.

In addition to the Power of Siberia pipeline, Russia is developing a second pipeline from its Far East, expected to add 10 bcm per year by 2027. However, negotiations for the proposed Power of Siberia 2, which could push total Russian gas exports to China to nearly 100 bcm annually, have stalled over pricing disagreements. A recent decision by Mongolia’s government not to include funding for Power of Siberia 2’s pipeline construction in its five-year economic plan has widely been understood to mean that China is rethinking the pipeline project.

While China has emerged as Russia’s top energy customer, Beijing is reassessing its dependence on Russian gas. Geopolitical concerns, the risk of over-reliance, and China’s interest in diversifying its energy sources are driving this reconsideration.

Despite this, Russia remains eager to grow its pipeline exports to China, as European markets continue to shrink under sanctions and alternative energy investments. The ongoing discussions and developments signal a significant shift in Russia’s energy strategy, with China playing a central role in its future plans.