Russia is aiming to deliver more than 15 billion cubic metres of gas to China this year via the Sila Sibiri trunkline — up from the 10.4 Bcm supplied last year.
A Russia-China conference in Moscow on Tuesday heard that state-controlled gas giant Gazprom is expected to increase supplies via Sila Sibiri by the end of this year, after bringing online a pipeline connecting the huge Kovykta and Chayanda fields in East Siberia.
The Sila Sibira line route starts at Chayanda and at present only carries gas from that field.
However, Gazprom said in October that it brought on stream some wells at Kovykta to help test facilities built to process and prepare produced gas before it can be pumped into the Chayanda connector and then onwards to China.
Russian gas supplies to China via Sila Sibiri are planned to rise to 38 Bcm per annum after 2025 when the Amur GPZ gas treatment facility on the Russia-China border is fully commissioned.
It has been suggested that Russia’s planned 100 Bcm per annum gas pipeline capacity to China may also be sufficient to accommodate exports by other gas producers as well Gazprom.
Russian industry observers expect Chinese gas demand to increase at a rate and double to 660 Bcm per annum by 2040 from current volumes.
LNG options
As well as pipeline gas, Russia is also looking to capture a larger share of China’s liquified natural gas market.
Speaking at the event in Moscow on Wednesday, Russian Deputy Minister Alexander Novak said the Russian government is considering offering Chinese companies a stake in the Gazprom-run Baltic LNG project.
Baltic LNG is a joint venture between Gazprom and privately held Russian player RusGazdobycha that aims to build a 13 million tonnes per annum LNG plant and an associated polymer facility near the Russian Baltic Sea port of Ust-Luga by 2026.
Moscow news agency Interfax quoted Novak as saying that he sees “potential in exporting LNG from the [Ust-Luga] port to China”.
Russian authorities also expect to be able to further increase oil exports to China, even at the expense of traditional suppliers such as Saudi Arabia.
Oil plays
Russian oil deliveries to China increased by 9.5% to about 528 million barrels between January and October this year, against the 541 million barrels that China imported from Saudi Arabia.
Russia is facing an embargo from 5 December on oil exports imposed by Europe in response to Russia’s invasion of Ukraine in February, plus a looming price cap on oil shipments to other countries that is still under discussion by the G7 group of leading economies.
The International Energy Agency (IEA) said it expects Russian oil production to be cut by about 2 million barrels per day by the end of the first quarter of 2023 as a result of the embargo and price cap, IEA executive director Fatih Birol told Reuters on Wednesday.
“There is a need to replace that oil,” he said.
Speaking in Moscow, Novak reiterated that Russia's authorities will ban the country’s producers from selling oil to buyers that are engaged in “non-market [price] mechanisms”.
However, the expected shortfall in Russian oil supplies on the global market may soon be offset by rising output in the US and elsewhere, according to Norway-based consultancy Rystad Energy.
Speaking at a seminar last week, Rystad senior analyst Leslie Wei said that, even with reductions in oil produced by Russia and Saudi Arabia in 2023, net global liquids supply is predicted to grow by more than 2 million bpd next year, with the US alone adding incremental output of 1.7 million bpd.
Wei still anticipates the return of Russian crude to international markets in 2024 after their expected decline next year.
