Russian gas exports will spark ‘explosive’ growth in underserved northeast, says China’s largest distributor
- But it will take 3,968km pipeline three to five years to have a major impact
- First gas from ‘Power of Siberia’ is expected to flow on a trial basis by December 20 this year
China’s underserved northeast will record “explosive” growth in consumption when Russian gas finally arrives next year in the region, the country’s only area not serviced by a natural gas trunk pipeline.
“In the next decade, the northeast will see explosive growth because, currently, only limited gas is imported from Qatar via a terminal in Dalian in [China’s northeastern] Liaoning province. And supply from small gas fields in [China’s northeastern] Heilongjiang province are far from enough to meet demand,” Frank Li Yuntao, general manager of investor relations at Hong Kong-listed China Gas Holdings, said on Wednesday.
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The company, China’s largest gas distributor with 508 projects, commands just over 70 per cent of the market in Liaoning and Heilongjiang. The nearby Jilin province is served mostly by small local state-owned franchises. China Gas invested in a gas distribution concession in Heilongjiang’s capital city Harbin as far back as a decade ago, but it has been waiting for gas supply to make it viable.
And it could take years before the 3,968km pipeline – called “Power of Siberia” – has a major impact, as it will only reach full capacity in three to five years, said Li. He said initial supply from Power of Siberia is expected at 5-8 billion cubic metres (bcm), while its total capacity stands at 38 bcm.
The pipeline, built at a cost of US$55 billion, will deliver natural gas under a 30-year, US$400 billion contract signed between Gazprom, the world’s largest proven gas reserve holder and exporter, as well as the Russian section’s developer, and PertroChina’s parent, China National Petroleum Corporation, in 2016. PetroChina, the country’s biggest gas producer and importer, is building the China section.
The first gas is expected to flow on a trial basis by December 20 this year, according to Gazprom.