Bulgaria, the Chief Executive Officers of Russia’s Gazprom and
Austria’s OMV sealed the deal to build the South Stream’s
branch to Austria. In its aftermath, Austrian President Heinz
Fischer defended the South Stream by saying: “No one can
explain to me – and I can’t explain to the Austrian people –
why a pipeline that crosses EU and NATO countries can’t go
50 km into Austria.” In July, Hungarian Prime Minister Viktor
Orban stressed his country’s commitment to the South Stream
during his visit to Belgrade, saying: “Those who say we shouldn’t
build South Stream should make an alternative proposal about
how we could live without energy.”
The official backing of the pipeline by the Italian
EU presidency in July summarised the EU stakeholders’
commitment to the pipeline when Italy’s State Secretary for
EU affairs Sandro Gozi said: “We think South Stream should go
ahead, as it would improve the diversification of gas routes to
Europe”.
Finally, the project has secured a long-term and much larger
role for Russia in supplying the EU energy requirements.
The Russian-Chinese gas pipeline
The Russian-Chinese gas pipeline is the most important Russian
pipeline to be realised in the current decade for its radically
increasing Russian share of the Asian gas market, now small and
limited to LNG exports, and its gigantic volume (1 trillion m
3
over its lifespan) and value (US$ 400 billion). After signing its
related gas deal with CNPC Chairman Zhou Jiping on 21
st
May
in Shanghai, Gazprom Chief Executive Officer Alexei Miller
described it as “the biggest contract in the entire history of
[Russia] and Gazprom”. The deal will allow Gazprom to invest
US$ 55 billion to develop its giant gas fields in eastern Siberia
and build a pipeline to supply CNPC with 38 billion m
3
/yr of
gas for 30 years, beginning in 2018. According to Miller, the
volume is approximately 20% of Gazprom’s sales to Europe.
Although the pipeline’s cost has not yet been announced,
it seems to be large as China may make up to US$ 25 billion
in advance payments under the contract to invest in the
necessary infrastructure, as stated by Russian Energy Minister
Alexander Novak in May. According to President Vladimir Putin
who attended the signing ceremony, the Chinese government
will spend at least US$ 20 billion on constructing its Chinese
section.
The required pipeline’s specifics have not yet been released.
However, to realise the deal, Gazprom will start developing
its Chayandinskoye field’s gas, constructing the first section
of the Power of Siberia Gas Transmission System (GTS), and
creating a gas processing complex in the Amur Region in 2015.
Thus, the Power of Siberia GTS seems to be the Russian pipeline
for exporting gas to China intended for gas delivery from the
Irkutsk and Yakutia gas production centres to the Russian Far
East and China.
The pipeline’s investment plan was approved by Gazprom
in October 2012. It will run in parallel with the operating ESPO
to enable Gazprom to streamline the infrastructure and power
supply costs. The approximately 4000 km pipeline
(52 in.; 61 billion m
3
/yr) consists of two lines: the 3200 km
Yakutia-Khabarovsk-Vladivostok line to be constructed at the
first stage and come on stream in late 2017 and, at the second
stage, the 800 km Irkutsk Region-Yakutia line whose completion
date is unknown.
Future projects
Russia-India pipeline
The Russia-India pipeline is a multipurpose project to initially
export Russian gas and subsequently oil to India. On the
sidelines of the July 2014 BRICS summit in Brazil, Russian
President Vladimir Putin and Indian Prime Minister Narendra
Modi discussed the possibility of building this pipeline from
Russia’s southern border to India either along the envisaged
Turkmenistan-Afghanistan-Pakistan-India pipeline route or
through the Himalayas. As stated by Russian Ambassador to
India Alexander Kadakin, Russia is planning to examine the
feasibility of the approximately US$ 40 billion project whose
construction will take about five years, and could become
the “biggest-ever energy project in history”. India’s ONGC is
interested in this project in co-ordination with Russia’s Rosneft.
Russia-Japan pipe
As an island, Japan has depended on LNG imports to meet
its gas requirements. Given the high cost of such imports and
Japan’s growing needs for LNG, especially caused by shutting
down its nuclear reactors, the feasible idea of importing
cheaper Russian piped gas via an offshore pipeline, which has
been floating around for years, has resurfaced. In May, a group
of 33 Japanese lawmakers revived the plan for a US$ 5.9 billion
gas pipeline (1350 km) between Russia’s Sakhalin Island and
Japan’s Ibaraki Prefecture, northeast of Tokyo. The proposed
pipeline is designed to transport as much as 20 billion m
3
/yr of
gas, equal to about 17% of Japan’s LNG imports.
Trans-Korean gas
Russia and South Korea have been interested in a gas pipeline
via North Korea for quite some time. Having no piped gas
imports as geography only provides for such imports via North
Korea, the country needs to decrease its dependency on
costly imported LNG by adding such imports, which requires
North Korea’s consent. The latter has also been interested in
the project due to its financial benefits. Yet, the two Koreas’
fluctuating and unpredictable ties has been the major obstacle
to its realisation.
To make it realised by securing North Korea’s co-operation
and addressing South Korea’s concern about the reliability of
North Korea for gas imports, in April, Russia’s Duma agreed to
waive approximately US$ 10 billion of North Korea’s Soviet-era
debt to fund mutual projects in North Korea, including a
proposed pipeline from North Korea to South Korea. This
provides for extending the Russian-North Korean project for
exporting 10 billion m
3
/yr of Russian gas to North Korea whose
MoU was signed in September 2011. If it becomes a reality, the
resulting 3199 km Trans-Korean gas pipeline to feed both Koreas
will be a branch of the Power of Siberia GTS.
16
World Pipelines
/
SEPTEMBER 2014
