Russia To Build $38 Billion Gas Pipeline To Asia

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Russian President Vladimir Putin has ordered Gazprom, the country's pipeline gas export monopoly, to build a 3,200km pipeline from East Siberia to the Pacific port of Vladivostok, reported Reuters on Monday, in an attempt to reduce the nation’s reliance on exports to Europe and develop closer ties with Asian customers.

According to Gazprom's Chief Executive Alexei Miller, his company had briefed Putin of their plans to invest 770 billion roubles ($24.5 billion) for a pipeline from the East Siberian Chayanda deposit to Vladivostok, while a further 430 billion roubles ($13.7 billion) would be invested into the development of the gas field.

"In the nearest future, we are able to create gas exporting capacity [to Asia] comparable to that of European gas exports," said Miller, as cited by Reuters.

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In 2011, Gazprom exported 150 billion cubic meters of natural gas to Europe, accounting for a quarter of Europe’s total gas needs. Gazprom, in partnership with Japanese companies, will also build a liquefied natural gas (LNG) plant in Vladivostok, which may could produce between 10 million and 20 million metric tonnes of LNG by 2020.

"We can create another exporting centre oriented to Asia-Pacific region," said Russian President Vladimir Putin, who has long talked about plans to diversify Russia's energy exports by shifting them to Asian markets.

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In total, Gazprom expects its East Siberian Chayanda gas field to contain at least 1.3 trillion cubic meters of gas. The company also hopes to develop other East Siberian fields, such as Kovykta, which is estimated to hold 2.5 trillion cubic meters of gas, to feed the eastern route.

The pipeline is expected to be completed by 2017. One of the key customers Russia hopes to target is China, the world’s top energy user. Though both parties have yet to agree to pricing, funding and routes, Russia hopes to ship as much as 68 billion cubic meters of gas to China eventually.