Why Gazprom Siberian Force 2 Could Bleed EU Out?

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Blue fuel or Liquid Natural Gas (LNG) that is quickly being seen as the new hope of the world, dominates energy needs world over. Europe has been making use of the largest reserves (tapped and untapped) in the Western Siberia region.

A new gas pipeline with the name Siberian Force (2) is being pulled along the Western Siberia region crossing Mongolia coming into China. Its Russia’s offering to the China. This new project, with 50 Bcm/y capacity, would deliver Russian gas to China to locations much closer to gas-consuming regions in eastern China. Also, it gives the advantage of utilizing gas resources from the prolific West Siberian Basin.

Total distance in Russia and Mongolia are estimated at 2,600 km and 980 km, respectively. The pipeline distance within China is estimated at only 560 km to the Beijing-Tianjin-Hebei (Jing-Jin-Ji) demand center. Everyone is wondering why the developer Gazprom is investing into a new line? The writing might not be on the wall, but while the existing line has been sufficing for the European or neighboring Commonwealth of Independent States markets.

The buck stops there- and Gazprom might have seen better monetary option with Russia after all. China’s needs for the blue fuel will increase dramatically in the coming years, as it goes off fossil fuel usage. Additionally, the new route also provides an opportunity to monetize some additional gas from fields along the route, mainly in Krasnoyarsk Kray, that would otherwise likely have remained stranded.

The new line will definitely eat into European supply and threaten existing supplies to the Chinese market. The latter include Turkmen gas. What goes in favor is the relatively lower distance to be covered logistically for the Siberian Force (2) gas pipeline. 

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