“That is, it is the fastest growing market and the largest of the fastest growing gas markets on the planet,” he said. In addition, with China, Russia has the opportunity to carry out both pipeline and LNG supplies, and the common border allows gas to be immediately supplied to the territory of this country, Frolov said.
In Russia, the eastern regions have an extremely low economic potential, and in order for the population to have prospects, it is necessary to develop the region’s economy, the expert continued. They began to do this at the expense of anchor projects, and such large projects are primarily oil and gas. This is the construction of large gas pipelines, oil pipelines, as well as the construction of processing enterprises, Frolov said.
Read on RBC Pro
The projects, in turn, generate additional jobs, increase tax revenues to local budgets, and at the expense of them the region develops, he noted. “Why China? Because the anchor project requires a large consumer. There is no large consumer in the region. The anchor consumer is China, which also needs this energy resource,” the expert concluded.
Gazprom signed an agreement on the sale of gas from the Far East to China
China has been interested in buying gas from Sakhalin since the early 2000s, the countries have been negotiating and only now have found a profitable formula, in turn, said Alexei Grivach, Deputy Director General of the National Energy Security Fund.
“This [увеличение поставок газа в Китай] does not pull on a spontaneous decision. I think this is due to the fact that demand for gas is growing in China, and relying only on LNG is too costly and risky. <...> In China, gas demand is expected to double in the next 15 years. Russia has the largest gas reserves. This is the natural course of things,” he said.
The expert noted that the deal indicates the strengthening of cooperation between Russia and China in the gas sector. “The volumes are small by Chinese standards, but the deal itself allows us to give momentum to bilateral cooperation in the gas sector, meet the growing demand for gas in China and increase the importance of Russian gas in the Chinese market,” Grivach said.
Thanks to the contract with CNPC, Russia will expand its presence in the rapidly growing Chinese direction, monetize gas reserves in Sakhalin, and also receive additional budget revenues from export duties, the expert continued. Thus, an increase in gas supplies to China will contribute to the development of infrastructure and an increase in the pace of gasification of the Far East, he believes.
“Another contract is on the agenda – for the supply of up to 50 billion cubic meters. m per year from Western Siberia to China. There will be a real diversification of the risks associated with the development of the European gas market, and a big breakthrough in our cooperation with China in the gas sector,” Grivach added.
Putin announced “very good” decisions on the supply of oil and gas to China
On February 4, Gazprom and China’s CNPC signed an agreement to increase gas supplies from the Far East to China by 10 billion cubic meters. m per year, that is, up to 48 billion cubic meters. m. The contract is designed for 25 years, said the press secretary of the President of Russia Dmitry Peskov.
On the same day, Rosneft agreed to supply 100 million tons of oil to Chinese CNPC through Kazakhstan within ten years. At current prices, the deal amounted to $80 billion. Now the company will export about 25% of its oil production to China.