Gazprom began connecting gas pipelines of the Far East with Eastern Siberia

Gazprom (MOEX: GAZP) announced the start of construction of the Belogorsk-Khabarovsk gas pipeline, which is designed to connect the gas fields of Eastern Siberia with the gas pipeline system of the Far East. The cost of constructing a pipe 800 km long has not been disclosed, but based on the average values ​​of previous construction projects, it could cost 300 billion rubles. According to analysts, the construction of the gas pipeline could close the gas shortage in the Far East, which arises due to the gradual decline in gas production on Sakhalin, the unclear timing of the commissioning of the Yuzhno-Kirinskoye field, while there are plans to increase export supplies to China.

Gazprom began construction of the Belogorsk-Khabarovsk gas pipeline. According to message Gazprom, the length of the pipe, which will connect the existing gas pipelines Power of Siberia and Sakhalin-Khabarovsk-Vladivostok (SHV), will exceed 800 km. Its route will run from the Amur Gas Processing Plant in Belogorsk to the junction with the storage facility in the Khabarovsk region. At the end of January, Deputy Prime Minister Alexander Novak reported that the construction of the Belogorsk-Khabarovsk gas pipeline is planned to be completed in 2029.

The project is being built to develop gas transmission capacities in the east of the Russian Federation and their integration with the gas infrastructure in the western part of the country, Gazprom notes.

They add that design and survey work is underway in other areas. The cost of the project is not disclosed. Based on the latest available data on the cost of the Power of Siberia, laying a kilometer of gas pipeline cost Gazprom 366 million rubles, which allows us to estimate the cost of the Belogorsk-Khabarovsk link at 293 billion rubles.

Gazprom head Alexey Miller promised to speed up the implementation of the Eastern Gas Program, which involves the construction of pipelines to transport gas to China, back in 2022. Then, after the outbreak of hostilities in Ukraine, European buyers began to refuse to purchase gas under contracts with Gazprom. Gazprom and the Russian government have repeatedly stated that the new market for the sale of Russian gas will become China. However, so far a large-scale turn towards China has been delayed due to the lack of agreement on the Power of Siberia-2 gas pipeline, which should connect Western Siberian fields and the cities of Eastern Siberia with subsequent access to the border with Mongolia and further to China.

In February 2022, Gazprom and the Chinese CNPC entered into a contract for the supply of 10 billion cubic meters of gas per year from the Far East, but the parties did not announce the start date for supplies. The resource base for the contract is supposed to be the Yuzhno-Kirinskoye field on the Sakhalin shelf, which has been under US sanctions since 2016.

According to Maria Belova from Implement, the main reason for the start of construction of the Power of Siberia-SHV link is the deficit gas balance of the Sakhalin cluster.

In particular, over the past decade, Sakhalin Energy (the operator of the Sakhalin-2 LNG project, where Gazprom has a controlling stake) has been unable to implement the project for the construction of the third stage of the plant due to a lack of raw materials. The presence of a binding contract for the supply of gas to China via the Sakhalin-Khabarovsk-Vladivostok pipeline, in the absence of a clear understanding of the start date of production at the Yuzhno-Kirinskoye field, is a good incentive to create a backup gas supply option, she believes. “But it’s not just about China: it’s proposed to implement a whole set of projects on Sakhalin that will become large consumers of gas, and their demand will not be satisfied even if the Yuzhno-Kirinskoye field is launched, so it makes sense to create a bridge immediately with the ability to pump up to 30 billion cubic meters “says the expert.

Sergei Kondratiev from the Institute of Energy and Finance also believes that Gazprom, after building the connection, will be able to redirect gas from the Power of Siberia to the Far East. In addition, this connection will make it possible to begin gasification of the Jewish Autonomous Okrug and the Amur Region.

Tatiana Dyatel