How Russia-China Gas Pipeline Changes Energy Calculus

Russia is pivoting its energy business to the east. The world’s largest exporter of natural gas has built an enormous pipeline running from Siberia to the Chinese border to feed China’s insatiable energy appetite. The new conduit, called the Power of Siberia, is part of a plan by Russian President Vladimir Putin to reduce his country’s dependence on gas markets in Europe and tap into the fast-growing economies of Asia. For China, whose domestic energy production can’t keep up with demand, the pipeline offers a vital new source of supply.

Built by Russian energy giant Gazprom PJSC, the pipeline runs about 3,000 kilometers (1,864 miles) from the new Chayanda and Kovykta gas fields in the coldest part of Siberia to Blagoveshchensk, near the Chinese border. Another gas line in China connects to the Russian system and will eventually stretch another 3,370 kilometers south to Shanghai. The Russian part of the line is managed by Gazprom, which in 2014 signed a $400 billion deal to supply 38 billion cubic meters of gas annually for 30 years to China National Petroleum Corp. It’s the Russian company’s biggest ever contract.