Russian Deputy Prime Minister Aleksander Nowak spoke enthusiastically at the end of last year about Russian gas transport to China through Kazakhstan. This generated enthusiasm for supporters of another project, the power pipeline Siberia 2. Beijing does not agree to its implementation.
It should be recalled that China has made its consent to fresh gas supply projects from Russia subject to the main requirement: the price of the natural material supplied should correspond to the price on the home Russian market.
Some Russians keep that the Siberia-2 Force will be created by 2030 anyway, as China is allegedly curious in this task in the long term, especially due to the low price of Russian gas.
However, we remember the speech of Russian Deputy Prime Minister Alexander Nowak, who already admitted in 2019, speaking to the Members of the State Duma that Siberia's strength is simply a “non-commercial” project.
Just look at the forecast of the price of a 1000 cubic meters of gas delivered to China by this route. According to estimates developed by the Russian Ministry of economical Development, this is $261 (near 1020 PLN, counting at the current exchange rate) this year, $247.3 (about 927 PLN, counting at the current exchange rate) next year and $235.4 (more than 919 PLN, counting at the current exchange rate) in 2027. This is more or little consistent with data published by the customs authorities of the PRC.
If you believe the same government forecast, selling Russian gas to Europe and Turkey in 2025 should bring Gazprom 320 dollars (about PLN 1246, counting at the current exchange rate) for a 1000 cubic meters of natural material.
If the Russian authorities agreed to the Chinese price demands — whether in the case of the nonexistent Siberia 2 power task or the hypothetical Kazakh way — they would gotta accept more than 150 dollars. (more than PLN 584, counting at the current exchange rate) for a 1000 cubic meters. — This is the price of Russian gas on the home market.
It should be added that the story of the cost-effectiveness of gas supply to China has been disproved by the economical experts of Gazprom themselves, not now, but in 2012.
“The Chinese will not be ready”
I reached the draft paper of the Sarat Institute of GipronIIgaz, which prepared the Kremlin's “explanatory Memorandum of Investment”.
After calculating the capital and operational costs for the 3 options of oil prices (60, 75 and 90 dollars per barrel) and 26 variants of the way and its facilities, experts concluded that the task will not return in 30 years — i.e. the period for which the contract was designed with the Chinese signed in 2014
Let us remind that Gazprom and pro-government Russian media estimated that the gas pipeline of Siberian forces was to bring Russia 400 billion dollars (about PLN 1 trillion 557 billion, counting at the current exchange rate) of profit over 30 years, delivering 38 billion cubic metres of gas to China annually.
Bloomberg / Contributor / Getty ImagesInfrastructure of the Siberian Power Gas pipeline in the city of Heihe in the Chinese state of Heilongjiang (illustration picture)
In order to guarantee specified a profit, the price should be on average PLN 350 (about PLN 1360, counting at the current exchange rate) for a 1000 cubic metres, which, as we can see, is now no place and will not become in the foreseeable future.
Gazprom should usage the money to compensate for the costs of building the gas transmission infrastructure (officially estimated at 1.1 trillion rubles, i.e. around PLN 48 billion, counting at the current exchange rate), as well as the costs of installing and building the Amur gas processing plant — but the company prefers not to mention it.
Gazprom is improbable to be able to accomplish a link leading to China through Kazakhstan. Russian Deputy Prime Minister Nowak says a feasibility survey is being prepared and negotiations are ongoing (it is not clear with whom and what), but the situation resembles widely publicised preparations to launch The unsuccessful task Power of Siberia 2.
