China extends Russian gas import pipeline: Update

Adds details on November deliveries

China has started operations at the second section of a gas pipeline link to Russia, boosting its supplies through the Power of Siberia 1 (PoS 1) pipeline, state-owned operator PipeChina said.

Construction of the 1,110km section of the pipeline started in July 2019. It was originally scheduled to be completed in October, but the timeline was pushed back to the end of this year because of Covid-19.

The second, mid-section of the pipeline starts from Changling in north China's Jilin province and crosses Inner Mongolia, Liaoning and Hebei provinces to end in the northeast port city of Tianjin. It will take Russian gas to the existing Shaanxi-Beijing pipeline network in northeast and northern China and connect to LNG terminals at Dalian and Tangshan.

The new section will increase the pipeline's transmission capacity to 27mn m³/d, increasing gas supply and peak emergency capacity in the Beijing-Tianjin-Hebei region, PipeChina said. It did not give a figure for previous transmission capacity.

China imported 3.1bn m³ of natural gas through PoS 1 in January-October, customs data show. Deliveries in January-April were pressured by weak demand during the Covid-19 pandemic and competition with lower-priced LNG imports. But pipeline flows have risen since May and exceeded 12mn m³/d in August-September to meet demand from China's recovering economy.

Average daily deliveries through the line were 16.2pc higher on the month in November, Russia's state-controlled Gazprom said today without giving an outright figure. This suggests volumes were around 11.2mn m³/d last month, with deliveries at 9.6mn m³/d in October Chinese customs data show (see table). Deliveries were also 13.6pc higher than contracted on average in November and as much as 25pc higher on 12 November, Gazprom said.

Chinese state-owned energy firm CNPC has a take-or-pay contract with Gazprom for a minimum of 4.25bn m³ this year. Deliveries are scheduled to rise to 10bn m³/yr in January 2021, then ramp up to 38bn m³/yr capacity for 20 years from 2025.

The Chinese portion of the gas pipeline is divided into three sections. The first, northern section of the pipeline, which was commissioned in December 2019, connects to PoS 1 at the border city of Heihe in Heilongjiang Province and runs to Changling.

The final stretch of the pipeline will run southwards from Yongqing in Hebei province to Shanghai. Work on this section started in late July, with completion expected in June 2025.

PipeChina took control of the pipeline of this pipeline when it began operations on 1 October as part of an asset transfer deal with PetroChina, the state-controlled arm of CNPC.