Russia’s Energy Giant In Biggest-Ever Gas Pipeline Deal With China

Russian energy giant Gazprom took another step towards what would be its biggest-ever natural gas supply deal with China, in a move seen as a bid to offset some of the effects of sanctions and severing of political ties after the invasion of Ukraine. 

China signed a deal today for a Russian natural gas pipeline to be constructed, which would accelerate the energy partnership between the two countries.

Chairman of the state-owned energy firm, Alexei Miller, met by video conference with S. Amarsaikhan, the deputy  prime minister of Mongolia on the deal.

“The parties discussed the progress of the Soyuz Vostok gas pipeline construction project in Mongolia,” a statement from Gazprom read. “It will be a continuation of the Russian gas pipeline ‘Power of Siberia – 2’ and will allow the supply of up to 50 billion cubic meters of Russian gas per year to China, the world’s fastest growing gas market.”

“At the meeting, the special purpose company Soyuz Vostok Gas Pipeline LLC and Gazprom Proektirovanie LLC signed an agreement to perform design and survey work as part of the construction of the Soyuz Vostok gas pipeline,” said Gazprom.

“The document, in particular, provides for the involvement of Mongolian companies for geodetic engineering, environmental engineering and archaeological surveys,” according to the Russian company.

Chairman Alexei Miller said, “Work on the Soyuz Vostok gas pipeline project is actively and successfully progressing. A month ago, the results of a feasibility study were approved, and today a design contract has been signed. This means that the project has entered the practical stage.”

Bloomberg News reported, “A new supply deal with China would also enable Gazprom to build an interconnector between its west- and eastbound pipeline systems, effectively allowing Russia to redirect gas toward China from fields that now only feed Europe. That could ease Gazprom’s reliance on the European continent, currently the single-largest buyer of Russian gas.”

Meanwhile, Shell, Europe’s largest oil company, said it would exit four oil and gas joint ventures with Gazprom, the Russian gas giant, valued at about $3 billion.

 

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