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Alternatives dismissed

China and Russia signed a general agreement on gas sales in 2010, but failed to agree on a price for Gazprom’s gas. Despite this, Gazprom started design and exploration work on the pipeline last year, causing concern among ecologists and activists and spurring an investigation by prosecutors. The available area for construction of the pipeline is relatively small – the Chinese border with Russia in the Altai republic is only 40 kilometers long – so some effect on the local ecosystem is inevitable, activists say.

“We don’t criticize, but support the export of Russian gas to China,” said Aleksei Knizhnikov, the head of WWF Russia’s oil and gas program. “What we do criticize is this route. We have shown that there are alternative routes that are better not only from an ecological, but also a profit perspective. There is a very good route via Mongolia or Kazakhstan.” Conflicts in recent years with Ukraine and Belarus over gas shipments, and their effects on business with Europe, have made Gazprom uneasy about dealing with transit countries, Vyacheslav Bunkov, an oil and gas analyst with Aton, told The Moscow News.

“The demand for gas in Europe is going down,” he said. “Gazprom is being driven out from Europe by other producers and China is becoming more important.”

China’s higher profile makes potential transit disputes even more problematic.

“[Transit] doesn’t only create certain risks for the project, but it also increases the price as transit countries charge extra for transit through their territory,” Bunkov said. “The main problem Gazprom is having with China now is that they can’t agree on price, so third countries would only complicate the situation.”

Negotiations with China are ongoing, and will resume this spring, Gazprom said.

The nearest direct route is 2,000 kilometers away, on the other side of Mongolia in the Amur region, and would make for a longer pipeline and higher construction costs.

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