Beijing, Moscow, Russia, Mull Over Arctic Gas Pipeline Across Mongolia To China

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China and Russia are discussing the possibility of putting into place a gas pipeline from Russia’s Yamal LNG plant in the Arctic, transiting Russia to Irkutsk and heading south through Mongolia en route to China. Additional supply lines are needed to feed China’s need for energy. China’s market is the worlds fastest growing, with Russian supplies to China expected to become as high as one trillion cubic metres by 2050.

China is about to receive its first Russia LNG via the Power of Siberia pipeline on December 1st. That transports gas from Yakutia to the Russian Far East Province of Primorsky Krie at Blagoveshchensk and then heads south into Northern China as well as Japan.

The order to examine the Mongolia route came from direct discussions between Russian President Vladimir Putin and the Gazprom CEO Alexei Miller, where Putin is said to have stated:
“I would like to refer to the issue that we have repeatedly discussed with you and with Chinese partners, I mean the possibility of using the resources of the Irkutsk and Krasnoyarsk regions. Also, have a look at the reserves in Yamal for supplies to China via the western route through Mongolia. That is a challenging route, though the preliminary consideration of the issue has shown that it is quite realistic, and Chinese partners also tend to agree.”

Such pipelines are hi-tech. They need to be able to withstand temperatures as low as -62 °C (-79.6 °F). Nanocomposite coatings are used to increase the lifetime of the pipelines, which must also be able to withstand earthquakes by incorporating materials that will deform under seismic activity. Internal coatings ensure energy efficiency by reducing the friction of the pipeline’s inner surfaces. The Mongolia pipeline can be expected to run alongside the Trans-Mongolia railway, which enters Mongolia from Irkutsk and heads across the country, exiting at the Chinese border city of Erlian. Russia agreed last week to upgrade this route.

The cost is likely to run into several billion dollars, and will also be a boost to Mongolia as the country will receive transit fees in addition to providing maintenance and support services. Should it go ahead, completion would be in the region of about five years as pipelines already exist between Yamal and Irkutsk.

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Silk Road Briefing is written by Dezan Shira & Associates. The firm assists foreign investors and advises Governments throughout Asia in facilitating trade and investment into the region, and maintains 28 offices throughout China, India, ASEAN and Russia. We also provide Belt & Road advisory and intelligence services. Please email us at silkroad@dezshira.com for enquiries or visit us at www.dezshira.com

 

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