Irkutsk pipeline to supply gas to China over 30-year period

Nov 18, 2003 01:00 AM

China is to receive 600 bn cm of natural gas from Russia's Kovykta Gas Field in Siberia over a period of 30 years, beginning from 2008, according to an international feasibility study signed by energy companies from China, Russia and South Korea on November 14 in Moscow.
A pipeline, originating from the gas field in Russia's Irkutsk region, will traverse the north-eastern part of China before going offshore to reach the terminus on western coast of South Korea, reports China's largest oil company, CNPC. CNPC, along with its Russian and South Korean partners, Rusia Petroleum and Korea Gas Corp., signed a preliminary letter of intent for gas sales and purchase via the pipeline on the same day.

The three companies are now waiting for the approval of their respective governments and will enter commercial negotiations on the gas project as soon as the go-aheads are secured. According to the international feasibility study to be submitted to the three governments, gas supply totalling 600 bn cm and 300 bn cm will be made to China and South Korea respectively over a period of 30 years, with the initial date of delivery slated for 2008. An annual supply volume of 20 bn cm and 10 bn cm to China and South Korea respectively shall be reached no later than 2017.
There are geological gas reserves ranging from 1.4-1.9 tcm in Kovykta, and that will enable an annual supply of 34 bn cm to Russia's West Siberia, China and South Korea for more than 30 years. As part of the project, areas south of Lake Bajkal in Russia, including Irkutsk and Chita, will be provided with 4 bn cm of gas annually through the pipeline as well.

The recommended land route of the pipeline, with a total length of 4,887 km, will first cross areas south of Lake Bajkal in Russia, and then enter China through the border city of Manzhouli. It will then pass north-eastern China's Shenyang and Dalian, a port city, where the pipeline is proposed to go under the Yellow Sea en route to South Korea. It is predicted that the total investment for the project, including pipeline construction and gas field development, will reach $ 17 bn. The three companies will make joint efforts in the next few months to reduce expenditures.
Contact between China and Russia on the cross-border gas project was initiated nearly 10 years ago when Boris Yeltsin was still Russian President. South Korea, another heavy consumer of imported energy in north-eastern Asia, was admitted into the negotiations in 2000.

The final success of the project, regarded as the largest energy cooperation project in north-eastern Asia so far, will still rest on the decisions of the three governments, especially the Russian government, which has recently been wavering on an oil pipeline project with China.
When the feasibility study is handed to the Russian government, the next step should be the organization of experts by the Ministry of Energy, who will conduct research, verification and evaluation of the study report, said Russian Deputy Energy Minister Gennady Ustyuzhanin. The Russian government will then refer to expert opinions when making the final decision on whether to allow the project to proceed.

Source: Interfax
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