Russia’s Gazprom Turns To China For Export Growth

on April 23, 2015 at 2:30 PM

Russia's Gas Monopoly Gazprom Headquarters

The gusher of liquefied natural gas ready to set sail on the world market in the next five years creates challenges for traditional gas suppliers, Russia’s Gazprom among them.

State-owned Gazprom is Europe’s biggest natural gas supplier, and it has turned east to China in recent years for new growth and a rival market to counterbalance its sometimes rocky relationship with Europe, its biggest export market.

Just Wednesday, the European Union accused Gazprom of hurting competition and charging unfair prices in different countries in Central and Eastern Europe. Gazprom dismissed those allegations as unfounded and said it expects a political resolution.

But in its dealings with China, Russia would like to first extend a pipeline from western Siberia to China, while China would like it to prioritize a pipeline that is now contracted farther east.

Qian Xingkun, vice president of CNPC Economics and Research Institute, said the strategic partnership between Russia and China is important in securing supply and integrating the global market. But he also said there are challenges.

“LNG imports are more competitive than pipeline imports,” he told a panel at the annual CERAWeek energy conference in Europe. He said much of the potential growth will be in the eastern and southern markets inside China.

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