Monday, September 8, 2014

Gazprom and China to Ponder Mongolian Pipeline to Deliver $400 Billion Gas Deal

Russian energy behemoth Gazprom and China National Petroleum Corporation (CNPC) are to decide if their gas pipeline that is delivering their $400 billion agreement will run through Mongolia.

Russian Natural Resources and the Environment Minister Sergei Donskoi revealed earlier this week that the two parties were considering the option after Russian President Vladimir Putin spoke with his Mongolian counterpart Tsakhiagiin Elbegdorj, who suggested the idea.

Donskoi, who revealed that the issue has been under discussion for almost a year, said: “This issue will have to be discussed at the level of Gazprom and CNPC, as the buyer, they should make assessments, raise questions and put forth demands. Mongolia will have to answer these questions.”

There are advantages and disadvantages to building the pipeline across the Mongolian plains. It would need fewer booster stations however the country’s extensive nature reserves may present barriers to its construction.

In May CNPC and Gazprom signed a $400 billion contract for the supply of gas into China for the next 30 years, with 38 billion cubic metres being sent annually. The two energy companies are among the largest in the world with CNPC being wholly owned by the Chinese government.

The western route will deliver West Siberian gas to China from 2019.

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