By Alexander Miller, consultant in energy markets. Eurasia Business News, October 11, 2024. Article n°1259.
« By the end of 2024, Gazprom will exceed the originally planned plan for gas supplies to China via the Power of Siberia gas pipeline by more than 1 billion cubic meters”, said Vitaly Markelov, Deputy Chairman of the Management Board of the company, on October 11 at the St. Petersburg International Gas Forum.
“We have increased gas supplies to China. This year, more than 1 billion cubic meters delivered more contractual obligations,” the top manager said. Markelov added that in 2024, Russian gas supplies to the countries of Central Asia are also growing, but he did not give figures.
In July of this year, the Russian Deputy Prime Minister Alexander Novak said that Russian gas supplies through the Power of Siberia gas pipeline in 2024, according to Gazprom’s contractual obligations, would amount to 30 billion cubic meters.
Russian gas is now exported to China only through the Power of Siberia gas pipeline. According to Gazprom, in 2023, deliveries through this pipeline amounted to 22.7 billion cubic meters, which is one and a half times more than in 2022.
Russian gas supplies to China via the Power of Siberia gas pipeline are carried out under a long-term contract between Gazprom and China’s CNPC, signed in 2014.
In 2020, they amounted to 4.1 billion cubic meters, in 2021 they increased 2.5 times to 10.4 billion cubic meters. Gazprom launched the Kovyktinskoye field on December 21, 2022, and the Power of Siberia section from Kovykta to Chayanda was also launched in December. Thus, gas began to flow into the pipeline from two fields.
Alexander Miller, consultant in energy markets, notes that in the northeastern regions of China, which receive gas from the Power of Siberia, there are “few other supply options,” and this ensures high demand for pumping through the Russian export gas pipeline.
Next year, when the Power of Siberia reaches its design capacity, it will be more difficult for Gazprom to exceed the planned supply volumes. This year, the Russian gas giant exceeds its contractual obligations for pumping in accordance with the capabilities of the pipeline system, and in 2025 we will be talking about exceeding the design capacity of the gas pipeline.
Despite the fact that the nominal capacity of the Power of Siberia is 38 billion cubic meters per year, the actual capacity could reach 43-45 billion cubic meters if the pipeline operates at 100% effective daily capacity every day, Smith points out. Gazprom previously discussed with CNPC an increase in supplies to 44 billion cubic meters per year. This was announced in June 2020 by the company’s Chairman of the Board Alexey Miller.
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The price of Russian gas for China when supplied through the Power of Siberia is tied to the cost of a number of petroleum products in the Asian market. As a result, as Yushkov notes, it is more profitable to buy it than liquefied natural gas (LNG), the cost of which depends on quotations on the spot market.
According to Smith’s calculations, now the price of Russian pipeline gas for China is about $250 per 1000 cubic meters. the price of gas for China for Russian pipeline gas may exceed $300 per 1000 cubic meters.
For comparison: Russian gas supplies to the EU market, according to Smith, are now carried out at an average price of $290 per 1000 cubic meters, for oil-pegged contracts it averages about $220 per 1000 cubic meters, for contracts pegged to the price of gas on the spot market – $380 per 1000 cubic meters, the analyst clarifies. But when supplying through the Ukrainian GTS, Gazprom incurs transit costs in the amount of $70-90 per 1000 cubic meters, he notes.
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© Copyright 2024 – Eurasia Business News. Article no. 1259.
Eurasia Business News 