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.


Mexico objects to labor enforcement provision in North American trade deal

Updated 15 December 2019

Mexico objects to labor enforcement provision in North American trade deal

  • Mexico produced more stringent rules on labor rights aimed at reducing Mexico’s low-wage advantage
  • US House of Representatives proposes the designation of up to five US experts who would monitor compliance with local labor reform in Mexico

MEXICO CITY: Mexico’s deputy foreign minister, Jesus Seade, said on Saturday he sent a letter to the top US trade official expressing surprise and concern over a labor enforcement provision proposed by a US congressional committee in the new North American trade deal.
Top officials from Canada, Mexico and the United States on Tuesday signed a fresh overhaul of a quarter-century-old deal, aiming to improve enforcement of worker rights and hold down prices for biologic drugs by eliminating a patent provision.
How labor disputes are handled in the new United States-Mexico-Canada Agreement (USMCA) trade deal was one of the last sticking points in the negotiations between the three countries to overhaul the agreement.
Intense negotiations over the past week among US Democrats, the administration of Republican US President Donald Trump, and Mexico produced more stringent rules on labor rights aimed at reducing Mexico’s low-wage advantage.
However, an annex for the implementation of the treaty that was presented on Friday in the US House of Representatives proposes the designation of up to five US experts who would monitor compliance with local labor reform in Mexico.
“This provision, the result of political decisions by Congress and the Administration in the United States, was not, for obvious reasons, consulted with Mexico,” Seade wrote in the letter. “And, of course, we disagree.”
USMCA was signed more than a year ago to replace the North American Free Trade Agreement (NAFTA), but Democrats controlling the US House of Representatives insisted on major changes to labor and environmental enforcement before voting.
The letter, released on Saturday, is dated Friday and addressed to US Trade Representative Robert Lighthizer. Seade said he would travel to Washington on Sunday to raise the issues directly with Lighthizer and lawmakers.
“Unlike the rest of the provisions that are clearly within the internal scope of the United States, the provision referred to does have effects with respect to our country and therefore, should have been consulted,” Seade wrote.
Both Canada and the US House Ways and Means Committee said the deal included a mechanism for verification of compliance with union rights at the factory level in Mexico by independent labor experts.
Some Mexican business groups bemoaned a lack of clarity and conflicting information on how the rules would actually be enforced under the deal, the first text of which became public only on Wednesday.