Mongolia

Construction Delay Hampers Russia’s Gas Pipeline to China

Mongolia’s Prime Minister, L. Oyun-Erdene, has expressed concerns about the potential delay in the construction of Russia’s Power of Siberia-2 gas pipeline to China. The project, expected to start this year, may face setbacks due to unresolved details between China and Russia, the Financial Times reported on Sunday.

This new pipeline aims to carry 50 billion cubic meters of gas annually from northern Russia to China, passing through Mongolia. It is a substantial amount, nearly equivalent to the now-damaged Nord Stream 1 pipeline under the Baltic Sea.

Prime Minister Oyun-Erdene stated that crucial aspects of the project, such as pricing, have yet to be agreed upon by both parties. He attributed the complexity of negotiations to the record global gas prices during the past two years.

Gazprom, the company set to operate Power of Siberia-2, has a target to commence gas deliveries by 2030. However, with unresolved economic and logistical issues, this timeline may be at risk.

Regarding the Mongolian portion of the pipeline, Russian Deputy Prime Minister Viktoria Abramchenko suggested that construction could potentially begin in the first quarter or first half of 2024, as reported by state news agency TASS last year.

The significance of this project is heightened by Russia’s need to compensate for the decline in gas sales to Europe following the Ukrainian invasion and subsequent Western sanctions. As negotiations continue, it remains to be seen how the Power of Siberia-2 gas pipeline will progress to meet the energy demands of both Russia and China.

 

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