Russian Federation turns on $55 billion gas pipeline to China

A car drives in front of facilities of Amur gas processing plant under construction part of Gazprom's Power Of Siberia project outside the far eastern town of Svobodny in Amur region Russia

Russia switches on gas mega-pipeline to China as Putin touts closer ties

Chinese President Xi Jinping and Russian leader Vladimir Putin watched via video link as the pipeline was inaugurated, before congratulating each other on an historic moment. "More than a trillion cubic meters of gas will be delivered to China through the Power of Siberia pipeline over 20 years".

"China and Russian Federation are at a crucial stage in their national development, and our relations are entering a new phase as well", Xi said at the inauguration of the pipeline.

The project, which has significant geopolitical implications, comes as Russian Federation increases energy exports to the world's largest gas importer amid Western financial sanctions, and as Chinese central planners continue to aggressively promote a switch from coal to cleaner-burning natural gas to help ease some of the nation's air pollution.

From Heihe, Heilongjiang, the eastern pipeline will eventually stretch through nine cities ending in Shanghai, and provide gas for more than 300 million residents of the Yangtze delta, the Bohai coast and northeast China.

The shift of market focus to the East will help Russian Federation, one of the largest exporters of natural gas, skirt the adverse effects of Western financial sanctions imposed over its 2014 annexation of Ukraine's Crimea.

The pipeline is part of Russian Federation efforts to develop ties with Asia - in particular top energy importer China - amid longstanding tensions with the West. Gazprom stressed that the pipeline ran through "swampy, mountainous, seismically active, permafrost and rocky areas with extreme environmental conditions". In May 2014, state-owned companies from Russian Federation and China, Gazprom and the China National Petroleum Corporation (CNPC), signed a $400 billion deal for the delivery of 38 billion cubic metres of natural gas annually for a period of 30 years.

Gazprom has stressed that the pipeline ran through "swampy, mountainous, seismically active, permafrost and rocky areas with extreme environmental conditions".

The pipeline, he continued, "takes Russia-China energy cooperation to a whole new level and brings us closer to achieving the goal set together with Chinese President Xi Jinping of extending bilateral trade turnover to $200 billion in 2024". Xi said the project served as a model of cooperation.

The project could help China's National Development and Reform Commission, China's top economic planner, meet a target of making natural gas 10% of the country's energy mix by 2020, and 15% by 2030.

The pipeline's capacity could further increase beyond 2024, PetroChina Vice President Ling Xiao said in June. "The eastern route, the Power of Siberia is a global, strategically significant and mutually beneficial project", said Gazprom CEO Alexey Miller.

According to this report, in 2018, the country's apparent consumption of natural gas reached 280.3 billion cubic meters, up 17.5 percent year on year.

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