Russia’s Sakhalin Island could provide China with more energy

Russia is considering boosting exports of liquefied natural gas (LNG) to China. The LNG would come from its largest island, Sakhalin, to fulfil Beijing’s growing energy demand, Russia’s envoy to the country has revealed.

“There are plans to supply liquefied gas to China not only from the Yamal [LNG plant], but also from Sakhalin. It can be partly supplied in the form of liquefied natural gas, and a pipeline may eventually built,” ambassador Andrey Denisov told journalists on Wednesday.

The diplomat explained that gas supplies via a pipeline are much cheaper, but such projects can be launched only if a long-term bilateral deal is sealed. On the other hand, LNG is more convenient as the pipeline works only one way, but at the same time the fuel in the liquefied form is more expensive, according to Denisov.

China is world’s fifth largest consumer of natural gas and has long been planning to increase imports from foreign suppliers, including Russia.

Moscow and Beijing are currently finalizing talks on the gas supplies agreement via the so-called ‘Western Route’, which stipulates building the Power of Siberia pipeline to deliver Russian gas from the Far East to China.

The new pipeline will deliver 38 billion cubic meters of natural gas annually for 30 years. The last remaining question the sides are discussing is the price, Denisov said.

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“Many issues are agreed, as far as we know, except for the main one, perhaps, the issue of defining the price,” the envoy told journalists.

Russia currently has two LNG plants – Gazprom’s Sakhalin-2 and Novatek’s Yamal LNG. Energy giant Rosneft is also planning to build a new plant in partnership with US’ ExxonMobil, Japan’s SODECO and India’s ONGC Videsh. The $ 27 billion Yamal LNG project, which began operations last December, has recently reached full capacity and has already shipped two million tons of the liquefied fuel.

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