Skip to main content

Russian Gas in China: Complex Issues in Cross-Border Pipeline Negotiations

Published in 2010

Russian Gas in China: Complex Issues in Cross-Border Pipeline Negotiations
Российский газ в Китае: сложные вопросы на переговорах по трансграничным трубопроводам

The Russian Far East needs a development plan, and starting exports of natural resources to the Asia-Pacific region might become such a project. There are substantial reserves both in West and East Siberia and the Far East that can serve as a resource base for Russian exports to the Asia-Pacific region. Russia is the largest gas reserves holder in the world; as much as 140 bcm/a, about 16% of its total output, will be produced in East Siberia and the Far East by 2030. The Eastern Gas Programme focuses on the development of the resources of East Siberia and the Far East and the possibilities of gasification of the Russian regions, as well as exports to the Asian Pacific countries.

China has historically pursued a policy of self-sufficiency in energy resources, and until as recently as 1993, it did not import oil. However, a sharp increase in demand resulted in the increase of imports - hence China became a net importer of fossil fuels. Since 2006 the consumption of gas has surpassed domestic production - so despite the fact that China has the capability to increase domestic production, liquefied natural gas and pipeline gas imports will become essential for China in the near future. In the beginning of this decade, gas constituted about 3.4% in China's fuel mix. At present, natural gas accounts for 3.7% of primary energy consumption having grown more than twofold in absolute terms in the last ten years. One of the objectives of the new energy policy is to gradually decrease the share of coal and simultaneously increase the share of gas in the fuel mix, which will result in even higher demand for gas in China.

Two countries, having a common and settled border still have not reached a seemingly logical agreement concerning gas trade. An important question is therefore: what are the key factors that impede reaching an agreement between Russia and China concerning pipeline gas trade?

This report was written by Irina Mironova during her internship at the Energy Charter Secretariat in May-August 2010, under the supervision of the Director for Trade and Transit Ralf Dickel.

The publication"Russian Gas in China: Complex Issues in Cross-Border Pipeline Negotiations" is available in English and Russian.