Sino-Russian gas trade set for boom time

Construction of joint venture Amur processing plant kicks off

Experts told the Global Times Friday that with China’s plan to increase usage of natural gas as well as Russia’s geographical advantages, the two countries’ natural gas trade will continue to boom in the coming years.

The Amur natural gas processing plant project, a joint venture of the Hubei-based China Gezhouba Group Corporation and the Russian gas industrial giant Gazprom, started construction on Thursday.

Located in Amurskaya Oblast of Russia and about 200 kilometers from the Heihe River in Northeast China’s Heilongjiang Province, the plant is the source of the east line of the China-Russia Natural Gas Pipeline, according to a statement posted on the official website of China Gezhouba Group Corporation.

Once completed, the plant will have a natural gas processing capacity of 42 billion cubic meters and annual helium production capacity of 6 million cubic meters, which will make it the largest natural gas processing plant in Russia and one of the largest in the world, the statement said.

China and Russia have been beefing up efforts to increase the natural gas trade with natural gas supply agreements and infrastructure construction.

An agreement was signed in 2014 by Gazprom and the China National Petroleum Corporation (CNPC) that 38 billion cubic meters of gas would be shipped to China through the east line every year for a 30-year period starting from 2018. Total investment in the east line, which is still under construction, amounts to some $400 billion.

The two countries have also talked about building a west line of the China-Russia Natural Gas Pipeline, though the process is not as smooth as the east line, according to domestic media reports.

If the two lines are both completed as planned, Russia will become the biggest natural gas exporter for China, Lin Boqiang, dean of the China Institute for Studies in Energy Policy at Xiamen University, told the Global Times Friday.

According to Lin, the growing cooperation results from the fact that China’s demands for natural gas are increasing, but the country’s resources are running low.

The Chinese government has set a goal that consumption of natural gas should account for up to 10 percent of entire energy consumption by the end of 2020. “This means that natural gas supply should increase by at least 15 percent year-on-year in the next few years,” Lin said.

According to Lin, the fact that Russia borders China is also an advantage for the two countries’ gas cooperation.

“At least trade wouldn’t be affected by political relations between Russia and other countries,” he said.

Apart from natural gas, the two countries have also built two oil pipelines under the China-Russia crude oil pipeline project.

“This is a golden era for the two countries’ energy cooperation, as China is thirsty for overseas energy, while Russia is anxious to sell its resources in exchange for money to boost its sluggish economy,” he said.

But he noted that China should work to enter the upstream sections of Russia’s energy industry, such as building joint ventures with Russian companies to dig for natural gas or oil, though obstacles might remain as Russia is quite protective about its energy resources.