Leading Russian building contractor Stroytransneftegaz has started laying the first section of pipeline along a route in East Siberia that will connect Gazprom's Chayanda and Kovykta gas fields, enabling the state-controlled monopoly to increase gas exports to China.


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Gazprom subsidiary Gazprom Invest said the contractor has laid and welded over 10 kilometres of the pipeline, “with works progressing ahead of schedule”.

“Over 2000 builders and 1000 units of equipment have been mobilised to construction sites, with the construction of temporary housing and storage sites ongoing," it said.

According to Gazprom, the 800-kilometre pipeline will connect the two fields before end of 2022 at an estimated cost of 280 billion roubles ($3.6 billion).

Expensive project

Under the multi-billion-dollar development scheme for the two fields, gas from the Kovykta field will reach the Chayanda field before it is fed into the already built Sila Sibiri trunkline that runs another 2200 kilometres eastwards to the border with China.

Stroytransneftegaz — where businessman and associate of Russian President Vladimir Putin, Gennady Timchenko, is a shareholder — is a traditional Gazprom contractor, having built major installations at the Chayanda and Kovykta fields.

Gazprom has recently upgraded its development scheme for the Kovykta field, as it wants to increase maximum annual volume of gas exports to China via Sila Sibiri to 44 billion cubic metres against the currently contracted 38 Bcm.

The monopoly also said that the construction of a major gas processing plant in the Amur region has passed a threshold of 67%.

The plant is a key element in removing off-specification components such as helium and ethane, from the incoming mix of gases produced at the two fields, before treated gas can be sent to China.

Analysts in Moscow have repeatedly questioned the economics of the whole project, suggesting that the prolonged decline of energy prices may extend its breakeven period for several decades.