Russia’s gas giant Gazprom on Tuesday signed an agreement with China’s state energy firm CNPC to build a second huge natural gas pipeline from Russia to China, Gazprom’s CEO Alexey Miller said.
Russia bets on selling increased volumes of energy products to China after losing Europe as a key oil and gas export market following Putin’s war in Ukraine.
Gazprom and CNPC signed today a “legally binding memorandum” on the construction of the Power of Siberia 2 gas pipeline from Russia to China via Mongolia, Russian media quoted Miller as telling reporters in Beijing.
Power of Siberia 2 has been a topic of discussions between Russia and China for years but no progress has been made so far.
Currently, Russia supplies pipeline gas to China via the Power of Siberia pipeline, one of the biggest projects recently completed by Gazprom and the first conduit for Russian gas to China.
The Power of Siberia 2 pipeline is designed to ship gas from Russia’s Western Siberia Altai region to northeast China via Mongolia.
An agreement on the Power of Siberia 2 has been elusive due to some sticking points, including the price at which Gazprom will deliver the gas.
The memorandum signed on Tuesday doesn’t include details and issues such as prices or capacity commitments, so the key sticking points remain.
“It should be understood that the project of the Power of Siberia 2 gas pipeline construction and the Soyuz Vostok gas pipeline construction, the transit gas pipeline via Mongolia and related gas transport facilities in China, it will now be the largest, having the greatest scale and the most capital-intensive project in the gas industry globally,” Russian news agencies quoted Miller as saying on Tuesday.
Russia touted the project as the biggest ever in the global gas industry, while China has yet to confirm the deal, which is light on details.
Miller himself acknowledged that Russia and China have yet to discuss issues related to financing and the price of supply.
By Tsvetana Paraskova for Oilprice.com
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