Kovykta gas went to China

Gazprom has started gas production at the Kovykta field in Eastern Siberia to boost supplies to China. Gas from Kovykta will be added to the Power of Siberia flow in order to increase its capacity to 38 billion cubic meters by 2025. At the same time, the project may experience problems in the gas processing part, since the timing of the commissioning of the Amur GPP capacities may suffer due to sanctions.

Gazprom has started gas production at the Kovykta field, the largest in Eastern Siberia, for deliveries to China via the Power of Siberia gas pipeline. The growth of exports to the east is especially important for Gazprom against the backdrop of a sharp reduction in supplies to Europe this year and the uncertain fate of its long-term contracts with Western European consumers in the future.

“An 800-kilometer pipeline has been built to deliver natural gas. It will connect the Kovykta field with the Chayandinskoye field in Yakutia. This section will complement the Power of Siberia main gas pipeline, thereby putting our most important gas transportation route into operation along its entire length,” President Vladimir Putin said at the field launch ceremony.

Both the Chayandinskoye field in Yakutia and the Kovykta field feed the Power of Siberia gas pipeline, which is expected to have a design capacity of 38 billion cubic meters per year. Deliveries from the Chayandinskoye field to China began at the end of 2019. In 2020, Gazprom supplied China with 4.1 billion cubic meters, in 2021 – about 11 billion cubic meters, the design capacity of the Power of Siberia should be reached in 2025.

The Kovykta deposit was discovered in 1987, but remained undeveloped for many years. Currently, the recoverable reserves of the field are estimated at 1.8 trillion cubic meters. Initially, Gazprom planned to produce 35 billion cubic meters per year at Kovykta on the “shelf”, but subsequently the number of wells in the project was reduced, and the project production was adjusted to 25 billion cubic meters, since it was not possible to agree on the sale of all this volume of gas to China. Oleg Aksyutin, deputy chairman of the board of Gazprom, announced on December 21 that production at Kovykta at its peak is now planned in the amount of 27 billion cubic meters.

Meanwhile, back in 2018, Gazprom announced its intention to increase exports through the Power of Siberia by 6 billion cubic meters (commercial gas). This involved increasing production at Kovykta and expanding the capacity of the Amur Gas Processing Plant in Blagoveshchensk (which separates ethane and helium) to 48 billion cubic meters from the current 42 billion cubic meters. In the spring of 2019, Vladimir Putin announced that he had received a request for more supplies from Chinese leader Xi Jinping. However, then the pandemic and the slowdown in the growth of gas consumption in China due to lockdowns, which have not been overcome so far, slowed down this discussion.

Meanwhile, under the new conditions of sanctions, an increase in supplies through the Power of Siberia looks problematic, since it is not clear how to ensure the expansion of the Amur GPP. In this project, in particular, the technology of the German Linde and the heat exchangers designed by it, as well as a number of other Western-made systems, are used. After the outbreak of hostilities in Ukraine, Gazprom and Russian officials mostly mention another route for gas supplies to China, the 50 bcm Power of Siberia-2 gas pipeline through Eastern Siberia and Mongolia, whose construction does not depend directly on Western equipment. However, a contract with China for the purchase of gas via this route has not yet been concluded.

Sergei Kondratiev of the Institute of Energy and Finance notes that after the decline in exports to the EU, the launch of Kovykta for Gazprom is especially important: this year China was withdrawing gas ahead of schedule. According to his estimates, this trend will continue in 2023, and exports through the Power of Siberia could reach 22–25 billion cubic meters. At the same time, the analyst notes the difficulties with the coordinated commissioning of mining, transport and processing capacities for Power of Siberia due to sanctions.

Tatyana Dyatel