Russia cements role as gas ‘kingpin’ with three new pipelines

Russian President Vladimir Putin and Chinese leader Xi Jinping are to inaugurate by video link-up the “Power of Siberia” pipeline, above, sending Siberian gas to China. (Reuters)
Updated 02 December 2019

Russia cements role as gas ‘kingpin’ with three new pipelines

MOSCOW: Russian President Vladimir Putin and Chinese leader Xi Jinping launch Monday a gas pipeline that is the first of three ambitious projects intended to cement Moscow’s role as top gas exporter.

Putin and Xi are to inaugurate by video link-up the “Power of Siberia” pipeline, sending Siberian gas to China in a move that will strengthen their ties amid Moscow’s confrontation with the West.

Russia is also planning to soon launch two more gas pipelines that will ramp up supplies to Europe while bypassing Ukraine.

TurkStream, which Putin and Turkish leader Recep Tayyip Erdogan hope to launch in January, is to transport Russian gas to Turkey.

Nord Stream-2, which would double Russian gas volumes to Germany, is expected to go online in mid-2020.

Analysts said the three projects have long-term economic and political benefits for Russia, which has inserted itself between European markets to the west and the rapidly growing Chinese market to the east.

“Russia is not only creating new income streams, but hedging its bets and bolstering its position strategically,” said energy analyst Andrew Hill.

“The ability to play one off against the other will not have been lost on either Gazprom or the Kremlin,” Hill, who leads the S&P Global Platts EMEA gas and power analytics team, wrote in a blog post.

He said the three projects were a sign that the Russian gas industry — “this kingpin of the global gas sector” — was becoming more mature.

Putin’s spokesman Dmitry Peskov said the significance of the 3,000-kilometer Power of Siberia pipeline running from remote regions of East Siberia to Blagoveshchensk on the Chinese border was hard to overestimate.

“This is important for our country, this is important for China,” he said ahead of the launch, stressing that the project would create jobs and infrastructure in Russia’s Far East.

The pipeline, which Putin has called “the world’s biggest construction project,” crowns years of tough negotiations and work in difficult conditions.

A 30-year, $400 billion deal was signed in 2014 after a decade of tortuous talks. It was the Russian gas giant Gazprom’s biggest contract.

Gazprom is to supply China with 38 billion cubic meters (1.3 trillion cubic feet) of gas annually when the pipeline is fully operational in 2025.

Gazprom stressed that the pipeline ran through “swampy, mountainous, seismically active, permafrost and rocky areas with extreme environmental conditions.”

Temperatures along the route plunge to below minus 6o degrees Celsius in Yakutia and below minus 40 C in the Russian Far East’s Amur Region.

Speaking in Moscow last week, Chinese vice foreign minister Le Yucheng said the pipeline would boost cooperation and allow the two countries “to complement each other’s strengths and pursue common rejuvenation.”

Ahead of the launch, officials also said work had been completed on the first road bridge between Russia and China.

The bridge, which is to open next year, will connect the city of Blagoveshchensk and the northern Chinese city of Heihe.

The Power of Siberia launch comes amid continued wrangling over Nord Stream 2.

The 9.5-billion-euro ($10.6-billion) pipeline has faced opposition from countries in eastern and central Europe, the United States and particularly Ukraine because it is likely to increase Europe’s dependence on Russian natural gas.

US President Donald Trump has threatened to hit Nord Stream 2 and those tied to it with sanctions.

While praising Russia’s gas projects with China and Turkey, Thierry Bros, an energy analyst at the Davis Center for Russian and Eurasian Studies at Harvard, said the Baltic energy link had become a victim of strong opposition from many in the West.

“Nord Stream 2 is not a success,” he said, noting that it was hard to say when Gazprom would be able to fully capitalize on its investment.


India opens vast railway network to private players

Updated 02 July 2020

India opens vast railway network to private players

  • The 167-year-old train network carries 20 million passengers daily
  • India’s railway ministry said it would now permit businesses to run trains along 109 routes
MUMBAI: India has opened up its vast railway sector to private companies, allowing firms to operate trains on certain routes, in a bid to boost its stuttering, virus-hit economy.
The 167-year-old train network carries 20 million passengers daily but is plagued by deadly accidents, rickety infrastructure, lack of modern amenities and poor investment.
In an announcement late Wednesday, the railway ministry said it would now permit businesses to run trains along 109 routes, inviting bids from firms weeks after New Delhi opened up coal mining to the private sector.
“This is the first initiative of private investment for running passenger trains over Indian Railways network,” the ministry said in a statement.
“The objective of this initiative is to introduce modern technology rolling stock with reduced maintenance, reduced transit time, boost job creation, provide enhanced safety, provide world class travel experience to passengers,” it added.
The project will require an investment of $39.8 million and private players will have to pay the government fixed haul charges and a percentage of profits determined during the bidding process.
Prime Minister Narendra Modi has sought to privatize a range of industries that have been under state control for decades, sparking criticism from the opposition Congress party.
“Now the government is in a desperate mood to sell a great chunk of one of our largest national asset #IndianRailways,” Congress politician Adhir Ranjan Chowdhury tweeted.
“Privatization cannot be construed as a panacea of railways malady,” he added.
The tottering network is notorious for accidents, with 15,000 passengers killed every year according to a 2012 government report that described the deaths as a “massacre.”
Asia’s third-largest economy has been clobbered by the pandemic and a months-long lockdown, growing at its slowest pace in at least two decades last quarter.
The shutdown, which put millions out of work overnight, is widely expected to plunge the country into recession.
Fears for the economy prompted the government to allow many businesses to resume operations starting last month despite an ongoing increase in infections, which have now crossed 600,000.
Even before Modi announced the lockdown in late March, the economy was struggling to gain traction with sluggish growth, record unemployment and a flurry of bad loans making banks reluctant to lend.