Kazakhstan, Russia map out gas pipeline to China

(Reuters) - Kazakhstan and Russia have established the route for a future gas pipeline to support shipments between the two countries and to China, Kazakhstan's energy minister said on Tuesday.

The pipeline would help Russia, hit by Western sanctions over its invasion of Ukraine, boost sales of its energy and commodities in Asia while also ensuring that Kazakhstan secures supplies for its central, northern and eastern regions.

"The issue of building a gas pipeline from Russia through the northern territories of Kazakhstan to China is being discussed, the route has been preliminarily determined, the conditions for the construction of this gas pipeline are being discussed," Kazakhstan's energy minister Almasadam Satkaliyev said.

He did not provide details.

Russia has been discussing a possible gas union with Kazakhstan and Uzbekistan to support shipments between the three countries and to other energy buyers, including China.

Russia's pipeline gas exports to Europe, which used to be the main supply market for oil and gas from Russia, almost halved last year following the start of what the Kremlin says is a special military operation in Ukraine.

To make up for the loss of the European market, Moscow is forging close trade and political ties with Asia, which has become the main buyer of Russian oil, a major source of revenue for the Kremlin.

Keen to increase sales of natural gas to China, Russia has been in talks with Beijing on the construction of a second pipeline, the Power of Siberia 2, with an annual capacity of 50 billion cubic meters (bcm), roughly in line with the 55 bcm capacity of the damaged and idled Nord Stream 1 undersea pipeline to Germany.

The talks have been fractious and there is still no agreement on the gas price.

Last year, Kremlin-controlled Gazprom also agreed to supply Chinese state energy major CNPC with 10 bcm of gas each year from Russia's far eastern island of Sakhalin.

Currently, Russia supplies China via the only one route - Power of Siberia pipeline, which is expected to reach full annual capacity of 38 bcm by 2025.

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