Source: Global Times    Published: 2019-12-3

Chinese President Xi Jinping and his Russian counterpart Vladimir Putin inaugurated the China-Russia east route natural gas pipeline by video link-up on Monday sending a signal that energy and cooperation in other sectors between the two countries are becoming the key to boosting multilateralism.

Entering service the same day, the pipeline will help Russia export up to 38 billion cubic meters of natural gas per year to China, according to an article posted on the China National Petroleum Corp (CNPC) website on Monday.

That's almost one-third of China's total natural gas imports in 2018. About 5 billion cubic meters of natural gas from Russia will be delivered to China in 2020 and will be gradually increased to 38 billion cubic meters per year, the article said.

CNPC is responsible for the construction and management of the project within China: Stretching from Russia's Siberia to China's Yangtze River Delta, the pipeline covers 8,000 kilometers, of which 5,111 kilometers fall within Chinese borders.

The project extends from Heihe in Northeast China's Heilongjiang Province to North China's Hebei Province and finally to Shanghai in East China across a total of nine provinces and municipalities.

Russia will deliver a total 1 trillion cubic meters of natural gas to China over the 30 years of contract, media reports said.

Following 20 years of negotiations, China and Russia reached the more than $400 billion contract in May 2014, the CNPC article read.

A China-Russia west route and China-Far East pipelines are also under discussion, the article said.

Win-win deal

Mutual benefit drove the two countries' energy development strategies.

A "rapidly rising China needs a stable and reliable energy supply, while an increasingly powerful Russia also needs to participate in the world's largest market," the CNPC article said.

The pipeline will help stabilize China's natural gas supply and guarantee the country's energy security, especially if the situation ever changes for ocean transportation of natural gas in certain waters like the South China Sea, Jin Lei, an associate professor at the Beijing-based China University of Petroleum, told the Global Times on Monday.

The construction of the pipeline fits the country's strategic energy blueprint, Jin noted.

"There is a China-Central Asia natural gas pipeline system in northwestern China, a China-Myanmar oil and gas pipeline in the southwestern region and about 20 liquefied natural gas (LNG) terminals in the eastern region," Jin said.

The construction of the China-Russia pipeline will make up for the lack of a cross-border natural gas pipeline in northeastern China, he said, noting that the China-Russia pipe is a strategic energy supply channel.

China is the world's largest natural gas importer.

In 2018, China imported 90.39 million tons (about 125.9 billion cubic meters) of natural gas, data from the General Administration of Customs shows.

The annual import of 38 billion cubic meters from Russia would account for nearly one-third of China's annual total natural gas imports, and Russia is expected to be China's largest supplier.

Thanks to Chinese demand, the pipeline will become an important channel for Russian exports, Jin said, especially if problems impede Russia's natural gas export to Western Europe.

Europe is a big export market for Russian gas, with Gazprom alone exporting about 202 billion cubic meters to European countries and Turkey in 2018, Reuters reported.

But those exports can suffer during political tensions.

The US and European countries oppose construction of Nord Stream 2, a Russian gas pipeline to Western Europe, over security concerns, The Los Angeles Times reported in June.

As a major resources export economy, Russia saw its natural gas production hit a record 725 billion cubic meters in 2018, of which 225 billion cubic meters were exported, Xinhua reported in January, citing Russian energy minister Alexander Novak.

The project deepens China-Russia relations, Chinese observers noted.

The US has become a net exporter of oil for the first time in decades, noted Wang Yiwei, a director of China's Institute of International Affairs at Renmin University in Beijing.

China-Russia energy and financial cooperation boosts multilateralism.

"Russia is not only a business partner, but more of a strategic partner in politics and diplomacy," he told the Global Times on Monday.

The success of the pipeline project will step up China-Russia cooperation in other aspects including regional cooperation and cyber-security, he said.

"Against the international backdrop that the US continues to contain China by even sacrificing its own interests, China supporting Russia is supporting itself," Wang said.

Wang Yiwei is a senior fellow of Chongyang Institute for Financial Studies at Renmin University of China.