Following the signing of the major 30-year gas contract worth of $400 billion between the two countries, Russia started building a pipeline that will not only connect its gas fields with refineries, but also allow for the supply of billions of cubic metres of gas to cover the energy needs of its south-eastern neighbour.
After over five years of construction in the at times difficult landscape of Siberia, the pipeline, named after the resource-rich area of Russia, is finally about to be officially opened by the heads of the two countries that are set to primarily profit from its completion – Russian President Vladimir Putin and his Chinese counterpart Xi Jinping.
Here is how Power of Siberia is going to change the Russian and Chinese economies and what advantages this brings:
- A major part of the pipeline’s gas flow will be covering the constantly growing needs of China, as its industrial energy consumption is increasing with each year since Beijing adopted a new policy of switching from the use of coal power to the more climate-friendly natural gas.
- Gas from Power of Siberia can also be used by Russia to boost its position on the global liquefied natural gas (LNG) market. Russian companies are currently mulling building a new LNG plant in Vladivostok, which can use natural gas pumped via the new pipeline from Siberia. The resulting LNG is expected to be sold to Asia-Pacific countries.
Developing gas resources and shaping gas transmission system in Eastern Russia. Green line – Power of Siberia on the map
- The new pipeline will also be connecting two remote Russian gas fields, the Chayanda and Kovykta fields, the biggest in the country’s east, and pumping the output to end-users. The profits from the gas sales could fund the discovery and development of new gas fields in Russia.
- The gas delivered from these fields will be used at two petrochemical plants constructed in Russia’s Primorsky Krai and Amur region. The construction, directly tied to the gas supplies from Power of Siberia, is expected to greatly boost the economies of nearby cities, as well as the respective Russian regions in general.
- One of these plants, in Svobodny city in the Amur region, will be using up to 42 billion cubic metres of Power of Siberia’s gas to produce various derivatives such as helium, ethane, propane, butane, pentane, and hexane. These gases can be used by Russia and importers in numerous spheres, such as space exploration, nuclear energy, fundamental science research, various equipment manufacture and medicine.