On December 2nd, Russian President Vladimir Putin and his Chinese counterpart Xi Jinping oversaw the launch of the 3,000 km-long ‘Power of Siberia’ landmark pipeline which will transport natural gas from the Chayandinskoye and Kovykta fields in Eastern Siberia to Northeastern China. The pipeline, operated in part by Russian company Gazprom, will be responsible for supplying 38 billion cubic meters of gas annually for 30 years to China National Petroleum Corporation (CNPC). This $400 billion contract, which emerged upon final negotiations during the 2014 Conference of Interaction and Confidence Building Measures in Asia in Shanghai, will cement China’s spot as Russia’s top export market, diversifying Russia’s income streams to include Asian markets.
To both leaders, the launch attests to a strengthening collaboration between Russia and China, as the pipeline is expected to raise “bilateral trade to $200 billion by 2024,” according to Putin. This, notes Xi, is an “example of…mutually beneficial cooperation.” Following Russia and China’s recent political tensions with the United States, the pipeline serves as a geopolitical maneuver. For Russia, who accounts for 17.3% of global gas production, a pivot to the East could put their “cheap pipeline gas…in competition with American gas,” as noted by Alexander Gabuev, an analyst on Sino-Russian relations. It could further mitigate the repercussions of Western financial sanctions imposed after Russia’s 2014 annexation of Crimea, and its continued armed efforts to gain control of Ukraine’s Donbass region. Territorially, closer energy partnerships between Beijing and Moscow could impede discussions between Moscow and Tokyo regarding their dispute over ownership of the Kuriles Islands.
As China remains entangled in a bitter trade war with the U.S., this pipeline could hinder sale of the U.S.’s pricier supplies to China, possibly neutralizing the impact of escalating sanctions, placing China in a position to continue its expansion of the Belt and Road initiative. Although this could embolden China to more aggressively challenge its neighbors over territorial disputes, policymakers are doubtful of Russia as a reliable long-term energy partner. This standpoint emerged as a result of Russia’s earlier manipulation of oil and gas exports to Ukraine, alongside it’s delay in pipeline construction in attempts to soften Beijing’s stand in bilateral negotiations. China has previously suffered severe gas shortages, following the government’s drastic shift to cleaner energy alternatives. And as demands for natural gas continue to rise, surging by 33% just in the last two years (according to the International Energy Agency), a consistent supply of gas would be in China’s best interest.
Financially however, the pipeline is costly. In spite of the “win-win model” of their energy partnership, in which China loans Russia for the development and transportation of gas whilst Russia delivers guaranteed volumes of energy to China, “until 2030, the Power of Siberia will not even pay off,” according to Mikhail Krutikhin of the Carnegie Moscow Center. This is especially the case as a lack of private competition in Russia’s gas industry affirms the underdevelopment of costly-to-extract reserves.
Additionally, the inhospitable climate and disaster prone areas of Siberia pose further construction and environmental costs. On the one hand, this pressured Gazprom to design the pipeline so that it primarily traversed sparse woods and fire sites, utilizing self-sufficient electric drives and self-propelled pipeline bridges which aid in mitigating environmental impacts. Yet, a study published by the Cambridge University Press suggests that the pipeline has evaded the scrutiny of the same international environmental standards of westbound pipelines, which could adversely affect indigenous communities of the Russian Far East.
Though the pipeline presents major geopolitical, environmental, and social concerns, this latest development in bilateral ties between Russia and China is not a surprising one. Discussions about the pipeline began in 2009 as Gazprom and CNPC signed the Framework agreement, determining the main terms of deliveries of Russian natural gas to China. More recently, their political relationship escalated in July of this year as Russia and China staged their first joint air patrol in the Asia-Pacific region, scrambling Japanese and South Korean air defenses.
What, then, does the launch of the pipeline implicate for the rest of the globe? With plans to launch two other major energy projects, the Nord Stream 2, an undersea Baltic gas pipeline to Germany, and the TurkStream pipeline to Turkey and Southern Europe, it is important that there are measures and bodies in place to ensure Russia adheres to international conventions, pertaining to the environmental and human impact, and legal frameworks. As suggested by Euronews, countries may also engage in greater discussion over territorial disputes and look to diversify their energy supplies so as to prevent countries, like Russia, from using energy sources as a “political weapon directly or indirectly in order to gain more influence.”