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Gazprom may boost gas supplies to China via Power of Siberia

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Russian gas monopoly Gazprom CEO Alexey Miller and China National Petroleum Corporation (CNPC) Chairman Dai Houliang have considered the possibility of increasing gas deliveries via the Power of Siberia pipeline by an additional 6 billion cubic meters after the supplies under the existing Agreement level off.

Miller and Houliang reviewed a wide range of issues related to their current and future cooperation during a video call recently. In particular, exports of Russian pipeline gas from the Chayandinskoye field to China via the Power of Siberia gas trunkline were discussed. It was noted that gas is being supplied consistently and in excess of the planned amounts. In October and the first twenty days of November, the daily average volumes exceeded the contractual amounts upon requests from the Chinese party, Gazprom said.

On November 12, the surplus in daily volumes hit a record high of 25%. In line with the Sales and Purchase Agreement, Gazprom is preparing to further ramp up the gas supplies in 2021.

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Also discussed were the projects for pipeline gas supplies from Russia to China via the Power of Siberia 2 gas pipeline across Mongolia, via the western route, and from Russia’s Far East, Gazprom said.

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Stable and flexible gas supplies are essential to achieving China’s environmental goals that call for reduced use of coal by industrial and residential consumers.

The meeting also touched upon joint efforts in the areas of underground gas storage, gas-fired power generation, sci-tech cooperation, use of gas as a vehicle fuel, staff development, standardisation, and equipment certification.

Gazprom’s main partner in China is CNPC, a state-owned oil and gas company. Power of Siberia is the largest gas transmission system in Russia’s East. The trunkline supplies gas to consumers in Russia’s Far East and China. It has an export capacity of 38 billion cubic metres of gas per year.

On May 21, 2014, Gazprom and CNPC signed the 30-year Sales and Purchase Agreement for Russian gas to be supplied via the eastern route. In 2015, Gazprom and CNPC inked the Heads of Agreement for pipeline deliveries of natural gas from Western Siberian fields to China via the western route.

Gazprom and CNPC in 2016 signed the Memorandum of Understanding on underground gas storage and gas-fired power generation in China. In December 2017, Gazprom and CNPC entered into the Heads of Agreement for natural gas to be supplied from Russia’s Far East to China.

In 2020, Gazprom started to assess the possibility of gas supplies across Mongolia in the amount of up to 50 billion cubic meters of gas per year.

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Gazprom and the Mongolian government signed in December 2019 a Memorandum of Understanding. The document provides for a joint assessment of the feasibility of the project for pipeline gas supplies from Russia to China across Mongolia. In August 2020, a Memorandum of Intent was signed to set up a special-purpose company. The company will be established in Mongolia with the purpose of conducting a feasibility study for a gas trunkline construction and operation project.

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