Gazprom's gas projects fail

Apparently, the coronavirus epidemic may be the last straw that will break the back of a plowing Chinese camel. World Workshop, a globalized locomotive economics, the main exporter and main consumer of resources, China announced force majeure and suspended the import of natural gas.

The event, of course, is significant and, possibly, it is from him that they will continue to count the beginning of the end of the “Chinese economic miracle”. How will this affect our country, whose affairs in the European gas market are getting worse and worse?



Bloomberg agency reported on the eve that the national Chinese company CNPC announced the suspension of gas imports due to force majeure caused by the coronavirus epidemic:



As you know, due to the imposed quarantine in China, entire cities and even regions of the country were blocked, in fact, the activities of many industrial enterprises traditionally oriented towards export stopped. The consequence was a decrease in gas consumption, plus the calendar winter and the heating season ended. Restrictions on movement hit domestic traffic and the tourism industry: transport, hotels, restaurants, and shops work less.

As a result, the Chinese economy, which was a real “Asian dragon” a few months ago, turned into a seriously ill patient, whose full recovery is in question. It is worth recalling that the PRC debt in relation to GDP exceeded 300%. This was not critical, as long as everything was good, and the economy grew at a frantic pace. And now, the coronavirus suddenly put Beijing on the bandwagon.

Chinese authorities announced a temporary refusal to purchase pipeline gas and LNG. As for liquefied natural gas, exporters from the United States, Australia and Qatar will suffer. For example, a contract with Washington for the purchase of LNG for 2 years worth $ 54 billion is in question. As for pipeline gas, Turkmenistan and Russia will have problems.

Last year, the Power of Siberia gas pipeline was opened with pomp, which should supply 38 billion cubic meters of fuel annually to China. The project cost the federal budget 1,1 trillion rubles, having risen in price from the original 800 billion. By the end of 2020, Gazprom should deliver the first 5 billion cubic meters, reaching full capacity only by 2025.

Different opinions were expressed regarding this gas pipeline, including very critical ones: its commercial payback was in question. Now these doubts begin to grow exponentially. Already, Beijing is warning of a suspension of supplies. But what will happen if the “Chinese economic miracle” really orders to live long? The question naturally arises of the advisability of building the Power of Siberia-2 pipeline.

Fast forward to our gas business west. In the battle for the European gas market, Gazprom is trying to complete the Nord Stream-2 and Turkish Stream pipelines. Now, in the Baltic Sea, maneuvering intricately, our only pipe-laying vessel, the Academician Chersky, is capable of completing the last 6% of Nord Stream-2. The reasons for such a strange route were told by Russian energy expert Igor Yushkov, explaining this by trying to circumvent US sanctions:



Right now, the Academician is heading to the Suez Canal, where it can run into the first obstacles. If this is done, it is possible that he will have to go back and go to the Baltic Sea via the Northern Sea Route, making a giant hook, which will take a lot of time. The question is what will happen next when the ship finally reaches the destination. Will Copenhagen be allowed to work in its waters with a pipe layer who does not have insurance from an international company? And if so, then how long will this agreement drag out, given the Danish leisurelyness in such matters?

And finally, the Turkish Stream. It seems like on the eve of Moscow reached a temporary agreement to resolve the situation in Idlib with Ankara. The work of the pipeline could well become a victim of the conflict with Turkey, but so far it has worked out. The question is, how long is this truce? Yes, and not in some Turks the problem of the project.

Serious opposition to the construction of the gas pipeline further to Europe has recently been complained by the Prime Minister of Serbia. Bulgaria, on whose transit services the work of the Turkish Stream directly depends, ostentatiously halved the consumption of Russian gas and knocked out a discount of 40%, which can also be considered not a good sign.