Less than a week after opening its first natural gas pipeline to China, Russia has mounted a new push for a second route through Mongolia to replace earlier plans for a line through Xinjiang.
On Dec.
5, Russia and Mongolia signed a memorandum of understanding (MoU) on a joint
assessment for a feasibility study to pipe Russian gas through Mongolia to
China, reports from the three countries said.
Although
the steps are preliminary, they have received high-level attention with a
commitment to an accelerated time frame.
The MoU
followed meetings in Russia between President Vladimir Putin, Prime Minister
Dmitry Medvedev, and Mongolian Prime Minister Ukhnaagiin Khurelsukh.
The
document was signed by Ulziisaikhan Enkhtuvshin, Mongolia’s deputy prime
minister, and Alexei Miller, CEO of Russian monopoly Gazprom, M2 Presswire
reported.
The
feasibility of the new route will be determined by experts from the three
countries within six months, Russian Deputy Prime Minister Alexei Gordeyev
said.
“The
deadline is tight,” said Gordeyev, according to the Itar-Tass news agency.
“The
schedule
is to calculate within half a year and send the proposals to the
countries’ presidents,” Interfax quoted him as saying.
The
cross-border route plan was previously discussed by Presidents Putin and
Khaltmaagiin Battulga in September during a meeting in the Mongolian capital
Ulaanbaatar, said Russia’s Sputnik News.
Following
those talks, Putin tasked Miller with considering the option of supplying China
with yet-to-be-developed Siberian resources from the Irkutsk and Yamal regions
on a western route through Mongolia.
“I know
the route there isn’t easy, but a preliminary consideration of this matter
showed that it’s absolutely realistic, and our Chinese partners tend to agree,”
Putin said, according to Interfax. “I ask that you study this issue and report
to me.”
An
accelerated push
The
latest movement on the Mongolian option comes just days after Russia opened its
massive 3,000-kilometer (1,864-mile) Power of Siberia pipeline, known as the
eastern route, on Dec. 2 to supply gas to northeast China and as far south as
Shanghai.
The
Power of Siberia route is expected to pump 5 billion cubic meters (176.5
billion cubic feet) of gas into China in 2020 and reach full capacity of 38
billion cubic meters (bcm) annually by 2025.
Russia’s
accelerated push for the Mongolian route represents a doubling down on China’s
economic growth despite recent “headwinds,” relying on its plans to shift more
of its energy consumption to cleaner but more costly gas from cheap but
high-polluting domestic coal.
But
perhaps equally significant is that Russia’s embrace of the Mongolian plan
appears to spell the end of its earlier drive for a direct western route on a
narrow corridor into China through Xinjiang after failing to sell Beijing on
the idea for the past 14 years.
Long
before starting the Power of Siberia project or considering Mongolia as a
second route choice, Putin and Miller argued that it would be quicker, shorter,
and cheaper to build a high-altitude pipeline across the remote Altai
Mountains, mainly because it would use Russian resources already developed in
Western Siberia.
Never
mind that the Altai route would pass through a nature reserve and a UNESCO
World Heritage Site at an elevation of 2,650 meters (8,690 feet).
Russia
also turned a deaf ear to China’s arguments that Xinjiang was already well
supplied with petroleum resources, as well as pipelines from Central Asia.
For
nearly a decade before the Power of Siberia project started in 2014, the Altai
route remained Russia’s first choice to supply China with 30 bcm of gas annually.
If, as
it appears, Russia has finally thrown in the towel on the Altai option, the
question is why now?
One
possible answer is that the worldwide focus on China’s suppression of the
Uyghurs in Xinjiang has persuaded Moscow that another big energy import project
in the region will never be considered secure.
Never
China’s choice
Edward
Chow, senior associate for energy and national security at the Center for
Strategic and International Studies in Washington, said the Altai plan had
plenty of problems before the most recent abuses of the Uyghurs came to light.
“The
Altai route was never the Chinese choice even before the current Uyghur issues
for simple reasons of geography, existing supply from Central Asia, and where
the Chinese demand centers are,” Chow said.
“It made
sense for Russia since it is a short distance on the Russian side and allows
Gazprom to direct West Siberian gas to China,” he said.
Russia’s
embrace of the Mongolian route appears to indicate that its calculation of the
advantages and disadvantages have changed.
“So,
maybe the Russians have given up on the Chinese ever agreeing to the Altai
route. Responding to Mongolia’s proposal is a nice face-saving way for both
sides to move on,” said Chow.
In
another possible sign of energy security worries about Xinjiang, China has said
nothing in the past year about its stalled plan to build a fourth gas pipeline
from Turkmenistan on a new Central Asian route to the Xinjiang border.
When the
“Line D” route through Uzbekistan, Tajikistan, and Kyrgyzstan was announced
with a series of intergovernmental agreements six years ago, the project was
expected to be completed in 2016. The target date has since been pushed back to
the end of 2022.
Russia’s
initiative on the Mongolian route suggests that Moscow plans not only to
compete with Central Asian gas but also to displace further expansion of
supplies from Turkmenistan, taking advantage of energy security fears over
Xinjiang.
Russia’s
push for a second pipeline route may add another layer of competition with
China’s imports of liquefied natural gas (LNG) at a time when bullish forecasts
are being reconsidered due to declining growth in the economy and gas demand.
Transit
security risks
But even
if worries over Xinjiang have become a determining factor in regional energy
route choices, it remains unclear whether they exist in China’s strategic
planning or only in Russia’s perceptions of security risks.
Transit
risks are generally considered to increase with each additional border
crossing, giving rise to Russia’s campaign for direct pipeline routes, such as
the controversial Nord Stream 2 pipeline across the Baltic Sea to Germany,
which bypasses transit countries including Poland and Ukraine.
One
interpretation of Russia’s new plan for China is that the addition of a border
crossing through Mongolia may now be considered less of a risk than a direct
route through Xinjiang.
On the
plus side for the Mongolia project, it offers more favorable terrain than the
Altai plan. On the minus side, it may require more investment in new Siberian
resources than Altai. The relative weight of those factors may become clearer
in the coming months.
While
China was unlikely to ever accept the Altai proposal, an Interfax report on
Dec. 3 appeared to take an apologetic approach to explaining Russia’s support
for the Mongolia plan in light of Chinese sensitivities.
“The
history of the gas industry in the post-Soviet world knows many examples of
transit disputes. For that reason, Gazprom has been trying to carry out
non-transit (direct) projects for the delivery of gas to major consumers, such
as Nord Stream and Blue Stream (across the Black Sea to Turkey),” it said.
The
report emphasized that the route choice was initially all Mongolia’s idea.
“Mongolia
has been proposing that Russia use its territory for the transit of gas to
China for years, arguing that this would ensure safety. a short route and
convenient geography,” Interfax said.
***
By
Michael Lelyveld
RFA
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