Russia’s top gas producer Gazprom expects China’s gas consumption to more than double, deputy CEO Alexander Medvedev said on Tuesday, suggesting the company is still counting on robust growth in demand in China even as the economy slows.
As part of Russia’s strategic shift eastwards prompted by rows with the West, Gazprom will supply China with gas via the Power of Siberia pipeline to be built in eastern Russia, raising volumes gradually to make China one of the biggest customers for Russian gas.
Gazprom’s officials said on Tuesday they still aimed to start those supplies in 2019.
China has pledged to reduce its coal dependence, a major source of air pollution and greenhouse gas emissions, and aims to raise gas consumption to 360 billion cubic metres by 2020 from 193.2 bcm in 2015.
Sources close to Gazprom told Reuters in January that Russia is likely to scale back the volume of gas it plans to ship to China later this decade, due to the dive in global energy prices and uncertainty hanging over the Chinese economy.
Medvedev, however, sounded more optimistic.
“Gas consumption (in China) will double and rise further,” Medvedev told reporters, without giving a timeframe.
China expects its domestic output of gas to reach only 190 bcm by 2020, meaning it will need to boost imports or find alternative sources.
“Russian gas sees no rivals,” Medvedev said, when asked about competition in all its markets from an expected influx of seaborne liquefied natural gas from the United States and other countries.
Gazprom has signed a deal to supply 38 billion cubic metres a year of gas to China over 30 years via the Power of Siberia pipeline, although initially the volumes would be less than that. So far, Gazprom has supplied gas via pipelines only to Europe.
The company believes that its gas will be highly competitive on global markets due to the weakening of the rouble which makes gas production cheaper.
Companies worldwide have invested billions of dollars in plants to produce LNG in countries such as Australia and the United States. However, growth in demand for gas is slowing, prices are falling and the LNG volumes that those companies are set to produce will exceed what major buyers such as China and Japan can absorb.
Gazprom also plans to sell 3 million tonnes of LNG from its portfolio in 2016 on the global market, unchanged from 2015.