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A major natural gas pipeline designed to ship gas from Russia’s eastern natural gas fields to China could further eat some of the growth in Chinese LNG imports in a few years, when the pipeline starts operations at full capacity, according to an S&P Global Platts analysis.
Earlier this month, Russia’s gas giant Gazprom said that the Power of Siberia pipeline to China is being filled up with gas as scheduled, with operations slated to begin in December.
While the initial volumes of Russian gas shipments to China will be low and unlikely to have a major impact on this coming winter’s LNG market in China, at full capacity in 2023, the pipeline from Russia is set to provide as much as 9.5 percent of China’s expected gas supply, possibly denting LNG import growth, S&P Global Platts has estimated.
“We have many city gas supply projects in the northeast, so the startup of the China-Russia gas pipeline is expected to ease our supply pressure in the winter peak season,” a source at a Chinese city gas supplier told S&P Global Platts, noting that the supplier could mull over reducing imports of LNG when the Russian pipeline gas starts flowing.
Russia will start shipping gas into China at a time when Chinese natural gas and LNG demand growth is slowing down amid weakening economic growth. Still, analysts don’t see China’s gas and LNG demand starting to fall in the coming years and decades.
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