Alexey Gromov, Principal Director on Energy Studies of the Institute for Energy and Finance, commented to the Profile business magazine on China's position regarding the construction of the Power of Siberia-2 gas pipeline.
China is deliberately delaying the construction of Power of Siberia-2 and plans to speed up the laying of a new branch (line D) of the Turkmenistan-China gas pipeline (aka Central Asia-China). This was reported by Western media, hinting that Beijing is considering abandoning Russian gas in favor of Central Asian gas.
According to Aleksey Gromov Beijing has no illusions about the resource base of the Turkmen gas pipeline.
Today, Turkmen gas costs the Celestial Empire about 30% more than Russian gas, which goes through the Power of Siberia-1. Partly because the gas produced at the key Turkmen field Galkinysh contains a large proportion of sulfur and, according to Gromov, “it needs to be prepared” before being transported through the pipeline.
“The experience of Chinese investments in Turkmen gas has shown that the economics of such production in practice is much worse than on paper,” the expert says. “Turkmenistan's proven gas reserves turned out to be significantly lower than those expected in the early 2000s.”
Beijing continues to think and weigh the benefits and costs of each option, but, according to Alexey Gromov, there is no “either-or” question for the Celestial Empire - both projects must be implemented, but on conditions that are most beneficial for China itself. Therefore, an extra reminder to the Turkmen and Russian partners that China has an alternative only strengthens its negotiating position.
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