BAKU, Azerbaijan, February 23. Russia's best option to export its gas is China, the World Bank said in its recent outlook, Trend reports.
According to the research, as the EU strives to decrease reliance on Russian fossil fuel imports, Russia is exploring alternative export routes for its pipeline gas, with China emerging as the primary option.
Russian gas production has significantly declined due to the reduction in EU-Russia gas trade. In 2022, domestic natural gas production in Russia dropped by 11 percent, equivalent to 88 bcm, as exports to Europe decreased. Forecasts indicate a further decline in Russian production from 2023 to 2025, reaching a level 150 bcm below that of 2021 by 2025. At the same time, this outlook sharply contrasts with the International Energy Agency's 2021 projection, which anticipated a production growth of 50-60 bcm during the 2021-25 period.
However, as the WB explains, there's a hurdle as the gas source for the Power of Siberia pipeline, connecting Russia's Eastern Siberian fields to northeast China, isn't linked to the upstream and transport infrastructure in northern and western Russia that previously supplied significant amounts of pipeline gas to Europe.
Consequently, redirecting gas exports from Europe to China via this route is currently not feasible, the WB analysts conclude. The development schedules of the Chayandinskoye and Kovyktinskoye fields in Eastern Siberia presently constrain the increase in Russian exports to China. Despite these challenges, gas deliveries to China through the Power of Siberia line have exceeded expectations. In 2023, Gazprom delivered nearly 23 bcm of pipeline gas to China, surpassing the original plan by 3 bcm. The company anticipates reaching the pipeline's full capacity of 38 bcm by 2025.
The remaining suggested export options from Russia either lack connection to Western producing fields and infrastructure or involve prolonged negotiations and construction timelines even after formal approval. A prime example of the first scenario is the Far Eastern route, capable of delivering 10 bcm, slated to commence deliveries from Sakhalin to Northeast China around 2026. Illustrating the second scenario is the proposed Power of Siberia 2 line, aiming for 50 bcm, which would link Russia's legacy infrastructure with the Chinese market, presenting a viable option for Gazprom to redirect gas flows to Asia, albeit not before the end of this decade.
As the WB noted, a potential short-term solution for Russia to redirect some of its currently stranded gas resources involves supplying gas via existing infrastructure to Central Asia, forming part of a proposed "tripartite gas union" involving Russia, Uzbekistan, and Kazakhstan.