Russian plans to increase natural gas exports to China by almost 50 percent this year, Deputy Prime Minister Alexander Novak has said.
Russia's Gazprom sends gas to China via the Power of Siberia pipeline under a 30-year contract worth a total of $400 billion. The pipeline was launched in 2019, and last year saw 15.5 billion cu m of gas flow through it.
This should increase this year to 22 billion cu m and gradually reach its full capacity of 38 billion cu m in 2027.
"Last year's gas supplies were at 15 billion cubic meters. In 2023, we expect 22 billion cubic meters, an almost 50% increase," Novak said.
There are also plans to expand the Power of Siberia with a twin pipeline, the Power of Siberia-2, with a view to boosting gas supplies to China to at least 98 billion cu m by 2030. Still, this is substantially less than the record 177 billion cu m, which it supplied to Europe in 2018 and 2019, Reuters notes.
The deputy PM, meanwhile, also said Russia was receiving more yuan payments for its oil and gas exports. It is also selling more oil and gas for rubles, Novak said.
The trend is part of what effectively amounts to a divorce between Russia and the West in the wake of the former's invasion of Ukraine and the latter's response, which took the form of a barrage of sanctions and asset seizure.
"The yuan and rouble are in high demand, so that vector will continue. China already pays in yuan for gas and partially for oil, there are settlements in the rouble as well," Novak told Russian media, as cited by Reuters.
The Chinese currency accounted for 23 percent of Russian import payments last year, which was up from 4 percent in the previous year.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More
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Comments
Russian gas supplies to China aren’t only going to rise by 50% this year but they could hit 98.0 billion cubic metres (bcm) once the Spirit of Siberia 2 gas pipeline via Mongolia is completed by 2030.
Moreover, China and Russia’s economies complement each other brilliantly with Russia having everything China needs from energy to wheat and food materials to technology and fertilizers and nuclear fuel and China provides Russia with the largest market in the world for its exports. Trade between the two strategic allies and neighbours are mostly conducted in their national currencies with the yuan accounting for 23% of Russian exports last year, a rise from 4% in 2021 and Russia receiving more rubles for its oil and gas exports according to Russian Deputy Prime Minister Alexander Novak . Moreover trade between them rose in 2022 to $190 bn compared with $11.0 bn in 2013.
Meanwhile, a global de-dollarization trend is gaining momentum led by China and Russia with a growing number of countries wanting to reduce their dependence on the dollar and using alternative currencies in their trade transactions.
Dr Mamdouh G Salameh
International Oil Economist
Global Energy Expert