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Russian President Vladimir Putin is hosted by Chinese President Xi Jinping for a high level meeting in Moscow in Moscow.
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China and Russia have now made progress due to one of the most interested in the world within the most attacked in the world in a decade. During the recent meeting of Shanghai organizations cooperation in Tianjin, China, the leaders of KSI and Putin signed the Memorandum for the power of Sibiria 2 ahead. This comes after years of stuck negotiations on pricing issues and costs.
Seeing signs of change, a company in many countries, primarily the US conducted the main plans for the construction of expensive new export facilities on gas, which in China, see the world’s largest importer, as all the world’s market. The announced memorandum therefore sent shock waves through the industry.
The details of the agreement has yet to be processed. Some of his intentions, however, are clear. The oil pipeline would need an incentive to the Russian war economy and a strong sign of Russian-Chinese connections. For China, it counts as a loud and clear message to the West that Beijing will refuse all and all sanctions against such an offer from Russia. Not less, I don’t mind to transfer Donald Trump’s desire to expand American fossil fuel “Domination”.
The influences would be serious and not only for the US
According to the International Energy Agency, between 2025 and 2030. years as much as 300 billion cubic meters from New export capacity The liquid natural gas will come online. It is a large number, just less than what the entire EU consumed 2024. Years.
Cheniere Air Facing of Natural Gas Energies in Construction in 2025. years, Port Arthur, Texas. (Photo Brandon Bell / Getty Images
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About half of the new capacity should be built in the US, the world’s largest LNG exporter. The second half would come from a range of nations: Canada, Qatar, Malaysia, Mozambique, Mexico, Argentina, Senegal and Nigeria, or already suppliers in China or have planned in the next few years.
Driving this new LNG structure increases world demand for natural gas, mainly as a lower spouse carbon carbon replacement in production, heating and electricity industry. Chinese annual demand, about 80 BCM, has grown Being the largest in the world and is a natural goal goal for a lot of new export capacity.
For the main importer such as China, the pipeline has several advantages over LNG. The gas on the pipeline is significantly cheaper and its price can be controlled, avoiding the volutility of regional LNG markets. It also takes care of the sea transport LNG over tens of thousands of miles, through stumbling points such as Panamese canal, Suez Canal or Straits of Horrum.
The key point is, however, that the significant supply of pipelines will weaken the economy of new export facilities and pressure on the global LNG market. This refers, above all, to American such facilities are highly capital intense and in this way sensitive to changes in market demand. The power of Siberia 2, whose annual capacity is 50 BCM, could replace at least a third of the total LNG imports LNG if it was launched only in half of this extent.
What other factors can help or interfere with the agreement?
To say that Moscow is eager for pipeline would be diplomatic. Russia is desperate to compensate for the loss of its European market after intrusion in Ukraine. The power of Siberia 2 will not solve this problem, far from him. But this could provide an important export path for gas production in the Arctic Yamal Peninsula, the largest Moscow new project, which submitted sanctions and deficiency and ice classes of LNG tanks that can move to the North Sea route.
50 BCM Capacity on the pipeline makes it close replacements for Nord Stream 1, earlier the largest unique line in Europe. But does China want a lot of Russian gas another question.
That’s one of the questions that held the project. Russia wanted to sell more than Beijing is ready to buy. The second question was in order to shut up at the price: China argued for a strongly subsidized domestic rate of Russia, while Gazprom, the National Company of the Kremlin, preferred market prices in Asia, usually twice as much. As these challenges can be solved is not clear. This does not mean that this will not happen, however.
Map showing the location of the Russian gas pipeline in China and Europe. The Russian pipeline system is predominantly west-oriented, and exports are largely halted or largely reduced. Two power of Siberian pipelines are shown. The power of the Siberia is complete, while the power of Siberia 2 has not yet been built. (Photo by Elmurod Usubaliev / Anadolu agency via Getty Images)
Anadolu agency via Getty Images
Another factor is the pipeline path, which goes through the heart of Mongolia. The Mongolian government consistently favored the project and its current president, Kurelluh Ukhna, confirmed it at the recent Trilateral meeting in Beijing with XI and Putin. Mongolia would also receive transit fees and possible gas supply for their own energy needs and economic development, now excessive depend on indigenous coal. At the same time, it is stated to stand out between the self-interest of two main powers.
Determination of factors could turn out to be another source of gas-china itself
In this situation, Russia has received a strong hand with a new agreement. But the truth is that China has most of the cards. The big reason is that there are many other suppliers and so it gives opportunities. This is called risk management, whether the object of eggs in baskets or critical resources and imports. To underline the point, Russia depends on China for almost half of its oil exports, while they are only 17.5% of Chinese imports.
China can also have Aso sleeve. As many as 60% of its total gas needs meet domestic production, which is on the rise since 2017. years. Although much of the conventional drilling is, China made it a central energy goal of developing its huge unconventional sources: solid gas, solid gas and metarian coal. Since the end of this year, it will convey conventional production together and threwing out of there as a dominant contribution.
View of the test platforms for Shale Gas in Kinghai Province of China. (Photo Li Jiangning / China News Service Via Getty Images)
China News Service via Getty Images
As I noticed in the previous one Forbes memberEstimates give China to the largest shale resources, even from us, although they made it difficult even though it was difficult to use, great progress has been made to a large extent New discoveries Show.
There is no doubt that this group of sources retained Chinese imports away than they would otherwise be. Their growth was actually a must of total consumption, suggesting that they could erase the amount of imported gas moving forward. That is, clear, plan. While Beijing has repeatedly emphasized in its five-year plans, the main goal is to make the country self-sufficient in resources and technology.
What we can say about the agreement of the gas pipeline at the moment
For now, a new supply of improvement between Russia and China will switch the natural gas geopolitics more than several degrees. Sets Chinese to a driver’s place as a swing player in a global LNG landscape, while setting up American gas companies.
It shows that China is ready to provide Russia additional support for his war against Ukraine. And this confirms the KSI, like Putin, will probably resist any further sanctions or other measures that want to restrict access to their country’s required resources.
