Russia, China Mull Mongolia Gas Route
The conflict in Ukraine has driven Russia and China to consider energy options that appeared far-fetched only a few months ago.
Russia’s rift with the European Union has raised risks for Moscow in its main energy export market, spurring efforts to forge closer ties with China as an alternate revenue source.
Mongolia is likely to be in competition with Kazakhstan, which has also offered its territory as an alternative to the Altai route, although the country already carries three strands of China’s Central Asia Gas Pipeline (CAGP) system from Turkmenistan.
Altering the route to pass through Mongolia would save 1,000 kilometers (622 miles) of pipeline, Mongolian President Tsakhia Elbegdorj said in July.
Russia’s Altai region offers only a narrow corridor on China’s border of some 50 kilometers (31 miles) at high altitudes of the Ukok Plateau, an area designated by UNESCO as a World Heritage Site and conservation area. Moscow has never been clear about how to address the limits on construction there.
In recent years, Mongolia has leaned toward Russia, relying on imports of Russian fuel, although over half of its foreign trade is with China, reaching $6 billion last year, according to Xinhua.
Western economic sanctions over Moscow’s alleged role in the Ukrainian crisis will not affect Russia’s plans to increase the throughput of the pipeline East Siberia – Pacific Ocean to 80 million tons of oil per year by 2020, in order to increase the shipments of Russian oil to China, Deputy Minister of Energy Kirill Molodtsov said on Tuesday.
“Russian Federation sees no risks or threats for these projects not to be implemented as scheduled,” said Molodtsov at the Sakhalin Oil and Gas conference in Yuzhno-Sakhalinsk, the RIA Novosti reported.
“We have the resources and raw materials needed and we have the capacity to increase the overall production,” Molodtsov said, adding that funds to fulfill this goal have already been mobilized.
The Chinese side has so far said it plans to import only 600,000 tons out of the 2 million tons, envisaged by the contract.
Russian Deputy Prime Minister Arkady Dvorkovich said Rosneft is continuing consultations with China National Petroleum Corporation (CNPC) to increase Russian oil supplies to China to 2 million tons this year.
In June 2013, Rosneft signed a $270 billion deal with CNPC to supply about 360 million metric tons of crude to China over 25 years.
Earlier on Tuesday, speaking at the same conference, the governor of the Sakhalin Region Alexander Khoroshavin also said that the western economic sanctions do not pose any serious threat to the energy projects implemented in Sakhalin. Khoroshavin has noted that the countries of the Asia-Pacific region are pragmatic when it comes to the economy and are not prone to making decisions that may harm their interests.
Meanwhile, Vlada Rusakova vice president of Russia’s Rosneft said on Tuesday the US energy giant ExxonMobil has not abandoned talks with Russian oil major Rosneft on the construction of a liquefied natural gas (LNG) plant in Russia’s Far East. The company considers constructing the Far-Eastern liquefied natural gas (LNG) plant within the Sakhalin-1 project to be the “best option,” he noted.
“The administration of the Sakhalin region supports the idea of integration,” Rusakova said, adding that the cost of construction of the LNG Plant is estimated at $8 billion.
Deputy Minister of Energy Kirill Molodtsov said on Tuesday Russian Ministry of Energy does not plan introducing any changes to Russia’s energy strategy for the period of up to 2035 because of the western economic sanctions.