Power of Sibera

Against the background of the growing energy crisis in Europe in the eastern direction, there was one very important event that is most directly related to the events in the Old World. Russia, Mongolia and China have signed an agreement on the construction of a new Soyuz Vostok pipeline, which should be a continuation of the Siberian Forces-2. Why does Gazprom need this project at all, if even the first Power of Siberia raises many questions about its commercial efficiency?

For the correct answer, it should be borne in mind that Russia is objectively tied to the European market. It is in Western Siberia that the largest explored gas reserves are located, and a huge network of main pipelines has already been built towards the EU. Long-term contracts for the supply of “blue fuel” have been signed, which provide the lion’s share of foreign exchange earnings of the federal budget. By the way, even if you want, you can’t just preserve a gas field where development has already begun. Our Western partners are well aware of all this and use this knowledge, demanding a discount from Gazprom and simply allowing themselves boorish remarks addressed to the Russian state corporation. The main message – where will you go from the submarine?

And really, where? We considered China as an alternative to the EU. In 2014, it was pompously decided to begin construction of a new gas pipeline, the Power of Siberia, which was to demonstrate to Europeans that Russia can do without them. Unfortunately, things did not turn out quite as expected.

On the one hand, the European Union has not been intimidated, as the Power of Siberia uses as a resource base the new fields of Eastern Siberia, not Western, from which all these Yamal-Europe, Nord Stream and other pipelines are fed. The logic of Europeans is this: what exactly are you going to scare us with? In fact, West Siberian gas in the EU has long been considered their own.

On the other hand, China took advantage of the difficult situation in which Russia found itself after the events of 2014, and knocked out the maximum preferences. Beijing will not allow the “Power of Siberia” to extend to its east coast, where all of China’s industry is concentrated, confined to the relatively sparsely populated northern regions. In addition, Gazprom has strong competitors in this market, represented by Turkmenistan and Kazakhstan. Therefore, China has managed to sign a long-term agreement on the supply of Russian gas tied to oil prices within China itself. As a result, Gazprom is forced to sell “blue fuel” at a price of $ 170 per 1,000 cubic meters, which causes tears of pity against the background of European records.

In general, the “Power of Siberia” is not the most successful energy project. So is it worth pulling the second one? What is this, some kind of gas scam? In fact, the “Power of Siberia-2” has a very real chance to take place, but with a few important conditions.

The first. The branch of the Siberian Force-2, called the Union of the East, from which we began this conversation, must reach the Pacific coast of China, where all of China’s industry is concentrated. Theoretically, this will make it possible to liquefy Russian gas and transport it by tanker to neighboring countries in Southeast Asia. Given regional prices, it will still be profitable.

The second. The key difference between the Siberian Force-2 and the first Siberian Force is that it will use West Siberian gas fields. The same ones from which the “blue fuel” goes to the EU, where some Europeans scornfully grimace at it. These are the already mentioned gas pipelines “Yamal-Europe”, “Nord Stream”, “Nord Stream-2”. The design capacity of the new pipeline should be 50 billion cubic meters of gas per year. For comparison, Gazprom today undertook to pump 40 billion cubic meters annually through the Ukrainian GTS, the design capacity of the Yamal-Europe pipeline is 32.9 billion cubic meters, and both Nord Streams have 55 billion cubic meters of gas per year.

In other words, the commissioning of the Siberian Forces-2 should completely drain any of the gas pipelines in the European direction. This is already serious. The country’s leadership is forced to respond to plans to reduce the consumption of “blue fuel” in the EU by preparing to shift the supply route to an alternative Asian destination. As an instrument of economic pressure on Western partners, the new pipeline could prove very useful.

Third. The construction of the Siberian Force-2 will allow for the parallel gasification of a number of Russian regions that Gazprom has not previously had access to. And this is to be welcomed.

Thus, in the conditions of the announced global energy transition, the practical benefits of the second “Siberian Power” may be incomparably higher than the first.