Gazprom initiated commercial negotiations with China's CNPC for deliveries of natural gas from Sakhalin

caseystubbs (42)in #steempress • 6 years ago

Gazprom initiated commercial negotiations with China's CNPC for deliveries of natural gas from Sakhalin. The infrastructure for the gas pipeline is already partially there, but the prospects of the project are unclear because of problems with the development of the South Kirinskoye deposits, which fell under the sanctions.

Gazprom yesterday announced the launch of negotiations with China's CNPC on commercial gas supplies to China via a pipeline from Sakhalin. The issue was discussed during the visit of the head of Russian state-owned gas company Alexei Miller in China, in the framework of which were negotiated all aspects of cooperation, including deliveries to China according to the already signed a contract for the Eastern Route, which has capacity of 38 bcm per year and plans to start supplies no later than 2021. Western route through the Altai, which for years was the main purpose of the negotiation of Gazprom is placed on supply from Sakhalin, which should be the complement and extension eastern route.

For the first time the idea of deliveries from Sakhalin to China were discussed in December 2014, when it became apparent that the contract for the Western route will not be completed soon. Then the Gazprom and Chinese authorities agreed to conduct technical studies and the volume of deliveries referred to 15 billion cubic meters per year.

The key problem is the limited resource base. It may actually be the only South Kirinskoye field on the shelf, on which in 2015 the United States imposed financial and technological sanctions. Gazprom for several years is going to build with Shell and Japanese companies, a third of all LNG plant on Sakhalin and Japan offered to Gazprom to build the marine pipeline.

South Kirinskoye located in the region with a complex ice regime, Gazprom planned to keep production there by a foreign subsea systems, but because of the possibility of such sanctions threatened. But yields from the shelf will only give 21 billion cubic meters of gas, and this is not enough for all areas - not less than 6 billion cubic meters of LNG-plant project, plus cost-effective supply through a pipe in China and some other amount for the gasification of the Far East. Finally, in the next three to four years, the investment program of Gazprom will increase seriously, and the monopoly can not pull another big project.

Obviously, Gazprom is afraid of being late, losing the Chinese market competitors, including those from the United States. According to experts, Japan may increase purchases of US gas to equalize the balance of trade between the two countries, which means that they will not be so interested in buying Russian gas.

Posted from my blog with SteemPress : http://marketsfinance.staging.wpengine.com/gazprom-initiated-commercial-negotiations-with-chinas-cnpc-for-deliveries-of-natural-gas-from-sakhalin-2/

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