Russian oil giant Rosneft is seeking a slot for its gas reserves to be exported to China via a planned second route of the Power of Siberia pipeline, Russian daily Kommersant reported on Monday, citing sources.
Rosneft’s chief executive Igor Sechin, considered a close ally to Vladimir Putin, has asked the Russian president in a letter that Rosneft be considered as a potential supplier of gas to the Power of Siberia 2 pipeline, in addition to the project leader, Russian gas giant Gazprom, Kommersant reported.
Russia currently supplies natural gas to China via the Power of Siberia pipeline, which went into operation at the end of 2019 after eight years of construction. Power of Siberia 2 is expected to be operational by 2030 and to connect gas fields in western Russia with such in eastern Russia and deliver gas to China via Mongolia.
The Power of Siberia 2 route is close to oil and gas fields operated by Rosneft, with reserves of 1 trillion cubic meters in the south of the Krasnoyarsk Territory and another 0.5 trillion in the Irkutsk Region. Therefore, Rosneft’s Sechin asked Putin in the letter to take into account “the volumes of independent producers to achieve a synergistic effect in the construction of the gas pipeline,” a source familiar with the contents of the letter told Kommersant.
Apart from being Russia’s largest oil producer, Rosneft is the third-biggest natural gas producer in the country after Gazprom and Novatek.
Yet, analysts believe that in view of its own enormous gas resources, Gazprom is unlikely to be interested in receiving gas from third parties for the future pipeline to China, according to Kommersant.
At any rate, Putin instructed in December Russian Deputy Prime Minister Alexander Novak to work out the issue with the Rosneft request together with Gazprom, Kommersant reports.
By Charles Kennedy for Oilprice.com
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Russia is already committed to supply some 38 billion cubic metres (bcm) of gas annually to China via the Spirit of Siberia 1 for the next thirty years. The flow of Russian gas to China could double once the Spirit of Siberia 2 via Mongolia becomes operational by 2030.
The Power of Siberia 2 route is close to oil and gas fields operated by Rosneft with reserves estimated at 1.5 trillion cubic meters or 14% and 5% bigger than the proven reserves of Norway and India respectively.
Sharing the pipeline with Gazprom could achieve a synergistic effect in the construction of the gas pipeline according to Rosneft. However, Gazprom may not be interested in receiving gas from third parties for the Spirit of Siberia 2 in view of its enormous gas resources.
President Putin has instructed Russian Deputy Prime Minister Alexander Novak to work out the issue.
Dr Mamdouh G Salameh
International Oil Economist
Global Energy Expert