Under Putin's gaze, Gazprom starts mega-pipeline to China

UK Reuters ^ | 9/1/14 | Vladimir Soldatkin

[RC one]

(Reuters) - President Vladimir Putin on Monday oversaw the start of construction on a giant pipeline that is due to ship $400 billion (240.78 billion pounds) worth of Russian gas to China in the three decades after flows begin in 2019.

The 4,000 km (2,500 mile) "Power of Siberia" pipeline, being built by state-controlled Gazprom (GAZP.MM), forms a key part of the Kremlin's energy strategy, symbolising Russia's attempts to wean itself off dependence on European markets that account for most of its exports.

"Just now, we along with our Chinese friends are starting the biggest construction project in the world," Putin told a Chinese delegation, headed by Vice Premier Zhang Gaoli, and a group of Gazprom workers in Russia's far east.

He said the first gas pipeline between Russia and China: "Will not only allow us to export gas, but to develop gas infrastructure in our country, to speed up (economic) development, not only in this region, but in the whole country."

Putin also told Zhang that he welcomed the idea of Chinese investors joining the Vankor oil project in east Siberia, owned by Russia's Rosneft (ROSN.MM). Gazprom is one of a handful of major Russian state companies not directly affected by Western sanctions. It accounts for around a third of Europe's gas needs, shipping 161.5 bcm to the region last year.Flows through the "Power of Siberia" will start at 5 billion cubic metres (bcm) of gas in 2019, ramping up to 38 bcm under a deal signed by the two countries in May.

Gazprom is one of a handful of major Russian state companies not directly affected by Western sanctions. It accounts for around a third of Europe's gas needs, shipping 161.5 bcm to the region last year.

Excluding Kovykta, the pipeline's construction along with developing Chayanda would cost around 770 billion roubles...

[Eric in the Ozarks]

We’ll see what “friends” Putin has in China...