President Vladimir Putin has opened a new Russian gas deal with China at a meeting with President Xi Jinping in Beijing today (Friday, February 4, 2022), promising to increase Moscow’s far east exports.
The new deals come at a time when Putin is at odds with European customers over the ongoing crisis with Ukraine.
Russia has been strengthening ties with China, the world’s biggest energy consumer, reducing its dependence on its traditional European energy customers.
“Our oilmen have prepared very good new solutions on hydrocarbon supplies to the People’s Republic of China.”
Vladimir Putin, who is in Beijing to attend the Winter Olympics.
“And a step forward was made in the gas industry, I mean a new contract on supplying 10 billion cubic metres (bcm) per year to China from Russia’s Far East,” Putin said in a meeting with Xi to discuss closer cooperation.
Putin accused the United States of stoking tensions over Russia’s neighbour Ukraine which is currently seeking NATO membership. This has resulted in the stationing of some 100,000 Russian troops near the borders of Ukraine.
The situation has caused claims of a possible Russian invasion of Ukraine by Western countries. But Russia has countlessly denied such claims.
Russia is Europe’s biggest provider of natural gas, and Western countries are worried that already strained supplies could be interrupted in the event of a conflict.
However, the new deal with Beijing would not let Moscow divert gas otherwise bound for Europe, as it involves gas from the Pacific island of Sakhalin, and will not connect existing gas pipelines between Russia and Europe.
Russian gas giant, Gazprom said in a statement that it plans to increase gas exports to China to 48 billion cubic metres a year, including the newly agreed pipeline which will deliver 10 bcm annually from Russia’s Far East.
Under previous plans, Russia aimed to supply China with 38 bcm by 2025 but did not specify when it would reach the new 48 bcm target.
An industry source disclosed to the media earlier today (Friday, February 4, 2022) that Gazprom has agreed to a 30-year contract with China National Petroleum Corporation (CNPC), with the first gas to flow through the new pipeline in two or three years. Gazprom currently has a monopoly on Russian gas exports by pipeline.
Power of Siberia
Russia now sends gas to China via its Power of Siberia pipeline, which began pumping supplies in 2019, and by shipping liquefied natural gas (LNG).
In 2021, it exported 16.5 billion cubic metres (bcm) of gas to China, including 10.5 bcm via the Power of Siberia pipeline, which is a network that is also separate from the pipelines that send gas to Europe.
Putin was accompanied by several Russian officials and business executives, including the Head of oil Giant Rosneft, Igor Sechin.
Alexei Miller, the Head of Gazprom is not in the delegation but Rosneft and CNPC signed a deal on supplying 100 million tonnes of oil to China through Kazakhstan for 10 years, the Russian company said, effectively prolonging the existing deal.
READ MORE: Facebook Owner Mark Zuckerberg Loses US$31billion in a Day
