As ties between Russia and China deepen the “Power of Siberia” pipeline (or the “China-Russia east-route natural gas pipeline” as it’s known in China) was officially launched yesterday. The gas pipeline, which stretches more than 3,000km, is both economically and politically important to both parties, especially as Russia pivots towards the east following western sanctions. The launch took place over a video call, with Putin saying: “This step takes Russia-China strategic energy relations to a new quality level and brings us closer to reaching the goal set together with Xi Jinping to raise mutual trade turnover to $200bn by 2024.” To which President Xi Jinping replied, “Together with Mr Putin we have announced our relations’ development, all-encompassing partnership and strategic co-operation entering a new epoch, and agreed that developing Russia-China relations is and will be a priority in our countries’ foreign policy. We will strengthen co-operation in various areas between our countries”.
In a world growing more environmentally conscious, the pipeline, which feeds into the “remote” northern city of Heihe, is of importance to China as the nation shifts its reliance away from coal, to supplying gas to homes for heating and cooking, and will help China’s plan to increase the use of natural gas to 10% by 2020. This is the world’s largest gas infrastructure project, which includes bridge, road and railway construction. It was agreed five years ago, when China National Petroleum Corp signed a $400bn energy deal with state-owned Gazprom, back in May 2014. Once completed, the pipeline will run 5,000 km and terminate in Shanghai. According to state-run press agency, Xinhua, Heihe has already registered 30,000 households to be supplied with gas to heat their homes, and estimated that it could take a year to fully implement the gas network into the city.
This is just one of the many projects that Gazprom has under its belt, reports suggest a Power of Siberia Mark II is also in the pipeline, excuse the pun. And Gazprom is also working on two separate plans to supply Germany by way of the Nord Stream 2 (expected to be completed early next year), and the “TurkStream” which will run across the Black Sea to the border between Istanbul and Bulgaria. Gazprom 8.265% 2034’s performed well last month, trading at an all-time high price, having rallied 23 points so far this year, it is currently trading at a yield of 4.25%.