have taken Russia’s Gazprom A new step towards the possible largest-ever natural gas supply deal with China after countries around the world cut economic and political ties with Russia over the country’s invasion of Ukraine.
Russia’s Gazprom said in a statement that the Russian gas giant had signed a contract to design the Soyuz-Vostok pipeline through Mongolia towards China, if Russia reached a new supply agreement with China.
The Soyuz-Vostok pipeline is scheduled to transport up to 50 billion cubic meters of natural gas annually to the Asian country, according to “Bloomberg” and seen by “Al Arabiya.net”.
A new supply agreement with China would also enable Gazprom to build a link between its westward and eastward pipeline systems, effectively allowing Russia to redirect gas to China from fields that now only feed Europe. This could ease Gazprom’s dependence on the European continent, as the single largest buyer of Russian gas at present.
The contract to design the pipeline comes as the European Union and the United States, along with countries such as the United Kingdom, Canada and Japan, have put unprecedented pressure on Russia after President Vladimir Putin ordered an invasion of neighboring Ukraine. Comprehensive sanctions limit Russia’s ability to import key technology, tap into foreign debt markets, and even access a significant portion of the $640 billion the country has created as a buffer to protect the economy.
While Russia’s energy exports remain unaffected at this point in the war, Europe has been exploring options to wean itself off Gazprom’s shipments.
In turn, CEO of Gazprom, Alexei Miller, said of the Soyuz Vostok line: “Today, the design contract was signed, and this means that the project has moved to the stage of practical implementation.” The statement did not give any details on the progress of supply talks with China.
In 2014, Gazprom signed a 30-year, $400 billion deal to directly supply China with up to 38 billion cubic meters of gas annually via the Power of Siberia gas pipeline, with deliveries beginning in late 2019. In recent months, when Gazprom’s flows to Europe are limited, and shipments to China have regularly been in excess of daily contract sizes.
At the beginning of February, Russia reached a smaller gas deal with China for a 25-year direct supply of up to 10 billion cubic meters per year from fields in the Far East.