On the night of May 21, 2014 heads of "Gazprom" and
officials of the power block of the government it was hardly succeeded to have
a sleep. The president Vladimir Putin arrived to Shanghai on negotiations with
the Chinese President Xi Jinping the day before, at their presence some tens
documents were signed, but among them there was no most important and
long-awaited. For the sake of what the meeting of heads of states was started.
Putin and Xi Jinping could not be present on signing of the
contract on supply to China of the Russian gas because the parties did not
settle terms. In the morning on May 21 information bomb was blown up by the
Financial Times newspaper. "We do not intend to sign … We already lose
money on import of gas and we are not able to afford to lose more", –
declared Financial Times of Mao Tszefen, the press secretary of
"daughter" of CNPC state company with whom "Gazprom"
conducted negotiations. It seemed, the transaction preparing nearly five years
for hundreds of billions dollars broke. But at the last minute the parties
managed to agree.
The head of Gazprom Alexey Miller and the head of CNPC Zhou
Jiping signed the contract for delivery to China of 1,032 trillion CBM of the
Russian gas within 30 years. The total cost of the contract exceeded $400
billion. To deliver to the northeast of China gas from Yakutia and the Irkutsk
region, "Gazprom" needs to construct the Power of Siberia gas
transmission system in five years. Its cost will exceed $55 billion, length of
the Russian section will make about 4 thousand km.
"We begin the largest construction project in the world. Is
larger than anything in the world will not occur in this area soon", –
Vladimir Putin at the ceremony of welding of the first joint of "Power of
Siberia" which took place on September 1, 2014 in Yakutsk declared. Putin
and the Deputy Prime Minister of the State Council of the People's Republic of
China Zhang Gaoli left the autographs on a big pipe which was based upon the
concrete bases and anything did not join. "Construction of the Power of
Siberia gas pipeline began!" – Alexey Miller declared. The ceremony
terminated in a concert.
The official chronicle a lot of the strange stayed behind
scenes. First, the welder order bearer Mikhail Kruglykhin cooked this first
joint for 400 km from the real pipeline route. Possibly, to carry the head of
state, the high-ranking Chinese official and tens journalists deep into of
Yakutia, to neighborhoods of the Chayandinsky field, organizers of a ceremony
did not risk. Secondly, general contractors of construction therefore building
there began with forces of the employees a customer – "Gazprom transgaz
Tomsk" still are not selected.
Thirdly, next day after a ceremony one of "daughters"
of the Stroygazmontazh company of Arkady Rotenberg reported that she won it in
a row on preparation of a platform for welding of the first joint of the gas
pipeline worth 94 million rubles. People in a uniform of
"Stroygazmontazh" on a platform it was visible not. In
"Stroygazmontazh" did not begin to answer questions RBC, having
reported that the company "communicates with the press, only if it is
interesting to it". Care is clear: the deputy chief of Chayandinsky
management of the Gazprom dobycha Noyabrsk company Victor Selin was dismissed
shortly after in interview to TASS agency said a possible delay of terms of
start of "Power of Siberia". "Gazprom" refused to call the
reason of his dismissal.
Round all project for $400 billion in general there is a lot of
unclear, uncertain and secret: basic parameters are, perhaps, everything that
so far it is known of it. The RBK log tried to find answers to the main issues
connected with "Power of Siberia".
1.
What is "Power of Siberia"?
Chayandinsky and Kovykta oil-gas condensate fields with a volume
of explored reserves of 2,7 trillion CBM – largest east "store rooms"
of "Gazprom". Now most of all gas it is got in Western Siberia – on
Novy Urengoy, Bovanenkovsky and other fields. Gas pipelines from them to Europe
were constructed mainly at the time of the USSR. East fields are open in the
late eighties, however their development and construction of pipelines to them
them were very long postponed.
Negotiations with China on supply of the Russian gas last more
than ten years. At first the parties discussed the Altai gas pipeline – the
thread conducting from the equipped western fields to northwest border of
China. Length of such gas pipeline would make 2 thousand km, and times were not
needs to be spent for arrangement of fields, the price of gas could be low.
Besides in this case China would become the direct competitor of Europe. But
Chinese were against the western route. Deficiency of gas was observed in
densely populated central and east regions of China, and sparsely populated
western areas and were so supplied thanks to the gas pipeline from Turkmenistan
and own production. So in a case with "Altai" China should be spent
for transportation of the Russian gas in the center and on the East.
In 2009 Russia and China signed the first framework agreement on
gas supply, and "Gazprom" started preparing for arrangement of the
Chayandinsky field and construction of the gas pipeline Yakutia – Khabarovsk –
Vladivostok (the name "Power of Siberia" was selected later at
competition). While negotiations with Chinese, Chayandu lasted and "Power
of Siberia" did not include in the investment program of
"Gazprom", but a preparatory work was conducted. In 2013 the child
design institute of "Gazprom" VNIPIgazdobycha increased revenue by a
third, to 12,4 billion rubles, generally due to design of "Power of
Siberia" and arrangement of the Chayandinsky field.
In July, 2013 "Gazprom" carried out purchases of pipes
of big diameter for 7 billion rubles, some tens cars in August already arrived
to warehouses to the Lensky area. Serious construction works will begin not
earlier than 2015 when on winter roads contractors are able to deliver the
equipment to platforms.
2.
Why agreed just now?
In the spring of 2014 at the St. Petersburg economic forum
Vladimir Putin who arrived directly from Shanghai looked a victor. Signing of
the multi-billion contract with China was presented by Russia as a big
geopolitical victory. "We have now a serious dependence on the European
Union, and in the light of sanctions and that Americans try to punch a gap in
the European gas market and to deliver the gas, it is especially
dangerous", – the director of analytical agency Small Letters Vitaly
Kryukov notes. Diversification of gas streams is necessary for Russia, and the
contract with China for long term was signed as it is impossible in time.
But critics too was much. The former deputy chairman of the
Central Bank Sergey Aleksashenko in the blog wrote that the price of the
Russian gas specified in the contract will not cover simple prime cost of the
gas delivered on a pipe to border with China. Mikhail Khodorkovsky in interview
to "Sheets" called "Power of Siberia" economically
neobathed project which "we build only to show "baddy" to
Europeans". Most of critics met in one: in Russia political interests
triumphed over economic, and China "bent" us, having successfully
used cooling of our relations with Europe.
Everything is not so simple. Russia very needs the Chinese
market, but also China very needs the Russian gas. In 2012 in the People's
Republic of China 107 billion cubic meters of gas, in 2013 – 121 billion were
extracted. Thus consumption in 2013, according to the report of Academy of
economy and technologies at CNPC, reached 167,6 billion cubic meters (nearly
14% more, than in 2012), a gain of import purchases – 25%. Following the
results of 2013 deficiency of gas in China made 6,7 billion cubic meters.
"Even taking into account the contract with Russia China
still did not close the needs for natural gas", – Ksenia Kushkina, the
expert of the center of power systems of Skoltekh speaks. According to
forecasts of the State committee on reforms and development of the People's
Republic of China, additional volumes of gas will be required to the country by
2020. The volume of demand for natural gas in the People's Republic of China
will make 411 billion cubic meters a year, whereas production – only 200
billion cubic meters. To the 2035th, by Kushkina's estimates, with China will
remain not contracted at least 50 billion cubic meters of gas.
The main reason for growth of consumption of gas in China –
ecological. In 20 years of the People's Republic of China turned into world
factory. In Beijing in 2013 the average level of concentration in air of small
firm particles hazardous to health made 89,5 mkg on 1 CBM, the official Chinese
newspaper "Renmin Zhibao" reported. In separate days their contents
reached 700 mkg on 1 CBM. According to WHO recommendations, daily safe standard
of concentration of the weighed dust particles in air – only 25 mkg on 1 CBM.
In anticipation of the Olympic Games-2008 in Beijing "Greenpeace"
even warned that because of environmental pollution there can be difficulties
with competitions.
China quickly increases demand for gas and expects to lower a
coal share in an energy balance which in 2009 exceeded 70%. According to plans
of the manual, the gas share in an energy balance of China by 2016 has to
increase to 8% (now about 6%), and by 2020, according to forecasts of CNPC, it
will reach 10%.
At the same time decrease in growth rates of coal mining was
outlined. Now the Chinese coal corporation (China Coal) expects that in the
12th five-years period (2011–2015) growth rates of coal mining in China will
decrease with 8,8 to 3,8% a year.
3.
What price of gas?
The definite answer on this question not yet. Because of
disputes round the price signing of the contract was postponed since November,
2013 to January of the 2014th, then for May, 2014.
Experts (Tatyana Mitrova from Institute of power researches of
the Russian Academy of Sciences, Valery Nesterov from "Sberbank of
CIB" and others) counted that construction of "Power of Siberia"
will pay off if the gas price on border with China makes $360–400 for 1
thousand CBM. On a question of journalists, whether the price for China will be
higher than $350, the CEO of "Gazprom export" Alexander Medvedev
answered uncertain "Oh, still as", and the Minister of Energy
Alexander Novak simply declared that the prices around $350 "in principle
are close to the contract".
From where in general this figure if data were not disclosed
undertook? Everything is simple: $400 billion should be divided for 30 years
and into 38 billion cubic meters of gas a year. Directly so it is wrong to
consider, Vitaly Kryukov from Small Letters is sure, the gas pipeline not in
the first years will reach design capacity.
Pricing in gas industry is made in two ways: in a binding to the
exchange, spot market and in a binding to a so-called oil basket which includes
the different oil products capable to be gas substitutes, in different regions.
"CNPC sought to tie the price of the Russian gas to Henry Hub, the
American market index of the prices of natural gas", – Ksenia Kushkina
speaks. "Gazprom" insisted on a binding to the oil prices: they more
predictable, and "Gazprom" has a long-term contract with
multi-billion investments. "It is attached as well as a formula of
calculation of the price for the European consumers, – Vladimir Putin after
signing of the contract explained. – It is the same formula which is attached
to market price of oil and oil products".
What formula and what of oil baskets is taken as a basis –
secret. The base price and coefficients register in the contract, recalculation
of the base price goes with a binding to fluctuations of a basket of oil, tells
Hooks from Small Letters. In negotiations with China the main disagreements
were concerning the base price, he speaks. The prices could be attached to the
JCC index (Japanese Crude Cocktail) which pays off on the basis of import
prices of mix of different sorts of oil in Japan, or to the European oil basket
– according to such scheme internal Chinese gas prices are now formed.
"The cost of gas is defined on the basis of dynamics of
prices of oil which in the European and Asian markets are rather close", –
the analyst of Gazprombank on oil and gas sector Ivan Hromushin argues.
"The majority of sources call the price in $350 for 1 thousand CBM at the
time of signing of the agreement. Now oil fell, and the price can already be
$300", – the CEO of East European Gas Analysis Mikhail Korchemkin assumes.
"It is impossible to call the exact price because it is
attached to price of oil, and this indicator changes", – tells RBC source
in "Gazprom" familiar with the course of implementation of the
project. But Alexey Gromov from Institute of power and finance believes that at
the time of signing of the contract the question of the price was not settled.
"If the price was known, anyway information would filter. Most likely, in
the contract there could be no point on the final price", – he argues.
Representatives of "Gazprom" did not respond RBC to the request, it
was not succeeded to receive comments of representatives of CNPC.
4.
What will Russia and China receive?
At a meeting with the deputy prime minister of the State Council
of the People's Republic of China Zhang Gaoli after a ceremony of connection of
the first link of "Power of Siberia" Vladimir Putin declared:
"We in general very accurately approach the admission of our foreign
partners, but, of course, for our Chinese friends of restrictions is not
present".
"China long tried to enter into the Russian power branch
"at the level of a source", access to production even was called a
condition of investment into the Russian export pipelines, – wrote after that
events to the edition of "Guanchkh". – But the Russian government did
not wish to give to the foreign companies access to reserves of oil and gas on
the land earlier".
Soon after the conclusion of the gas contract, on May 30, 2014,
the prime minister Dmitry Medvedev signed the order about transfer of the right
for exploration and production on the North Veninsky gas-condensate field in
the Sea of Okhotsk to the Venineft company, joint venture of
"Rosneft" and the Chinese corporation Sinopec. And on September 1,
2014 Putin told that the head of "Rosneft" Igor Sechin offered the
manual People's Republic of China a share of actions in "Vankorneft".
"Mister Sechin told that he made you the proposal to enter as the
shareholder one of our largest enterprises for oil production in the north of Russia.
The state will support such plans. Let's welcome your participation", –
Putin at a meeting with Zhang Gaoli declared.
On a trip to China of Vladimir Putin the Mayor of Moscow Sergey
Sobyanin accompanied. The delegation of the Moscow government signed some
framework agreements, work on them began the very active. Sobyanin suggested to
involve Chinese in construction of a new branch of the Moscow subway in the
Communard – as investors and, it is possible, as contractors of construction.
"Usually you will not wait for Khusnullin on half a year on object, – one
of owners of the lands adjoining future line of the subway was surprised in
conversation with the correspondent of RBC. – And as meetings returned from
China, so nearly every week, hurry with signing of the memorandum". The
Chinese investors can invest $2 billion in construction of the Moscow subway,
having in exchange had an opportunity to build commercial real estate near
stations.
To China the contract with "Gazprom" will allow to
reduce dependence on import of the liquefied natural gas (LNG). Now a half of
import of gas to the country is the share of it, and there were 100% five years
ago. The situation was changed by commissioning of pipelines from Myanmar and
Turkmenistan (the cumulative power of 12 billion cubic meters a year). As of
2014 China has seven large contracts on import of LNG with Australia, Malaysia,
Qatar, Indonesia and the European companies. Cumulative annual power of these
deliveries does not exceed 25 billion cubic meters, the prices vary from $135
(Australia) to $667 (Qatar) for 1 thousand CBM. It is indefinitely difficult to
increase volumes of supply of LNG because of shortage of tankers and gas
liquefaction plants.
Besides, in the White book "Chinese Power Policy-2012"
published by press office of the State Council of the People's Republic of
China it is said that "risks of transportation of resources by the sea
increase, and there is a problem of operation of sea pipelines". For China
with the high level of energy consumption gas becomes a strategic resource, and
therefore stable deliveries are necessary. The People's Republic of China makes
a choice for the gas delivered on overland pipelines.
5.
Who will earn on pipes?
In the middle of negotiations of "Gazprom" with Chinese
there was a local revolution in purchasing policy of gas monopoly. FAS
initiated proceedings in the relation of "Gazprom" and its long-term
largest supplier of pipes, "The northern European pipe project the"
(SETP) belonging to Boris and Arkady Rotenbergam. Anti-monopolists managed to
force "Gazprom" to break lots into smaller and to consider at
assignment of delivery time of feature of production. As a result for the first
time for many years vendors – the United Metallurgical Company (UMC) of Anatoly
Sedykh and partners, Chelyabinsk Tube Rolling Plant (ChTPZ) of Andrey Komarov,
Alexey Mordashov's "Severstal" and the Pipe Metallurgical Co. (PMC)
of Dmitry Pumpyansky had an opportunity to deliver pipes directly to
"Gazprom".
"Power of Siberia" will require 2,5 million tons of
pipes, from them 1,7 million tons have to be put in 2014-2018. In June, 2013
passed the first tender worth 7 billion, OMK and ChTPZ won lots on delivery of
31 thousand tons of pipes to the sum of 2,3 billion everyone, "Severstal"
got the rest. Construction of the gas pipeline was postponed, however, for a
year therefore pipe manufacturers started executing contracts only last summer.
To Ust Kut in the Irkutsk region pipes go by rail, and farther are delivered by
river transport – the lensky motor ship contains about 300 pipes.
Did not announce other tenders for delivery of pipes
"Gazprom" at the time of signing of number in printing. But gas
workers in a new way will work now with pipe manufacturers. At the end of
September "Gazprom" signed with "Severstal", Pipe
Metallurgic Company, OMK and ChTPZ the agreement on special conditions of
pricing on pipes of big diameter. According to representatives of ChTPZ and
OMK, their essence is reduced to that "Gazprom" will advance
deliveries of pipes under the Power of Siberia project in exchange for granting
a discount.
Metallurgists refuse to call concrete figures of the advance payments
and discounts specified in the agreement, carrying these data to a trade
secret. "Interfax" with reference to the sources wrote that advance
payments will reach 30–40%, and the provided discounts – 10%. "These
figures are relevant", – the representative of Pipe Metallurgic Company
speaks. New conditions will be applied to the contracts signed after October 1,
2014.
The pipe companies have today not the best times, and
infrastructure megaprojects of gas monopoly, "Power of Siberia" and
South Stream, can become for them essential help. ChTPZ plans to direct to 30%
of the capacities for production of pipes for "Power of Siberia",
the press secretary of the company reported. The revenue of ChTPZ in 2012 made
112,4 billion rubles, a loss – 1,9 billion.
6.
Who will earn on building?
Three largest construction contractors of "Gazprom"
have similar names. "Stroygazkonsalting" (SGK) based by Ziyad Manasir
and now belonging to Ruslan Baysarov, Arkady Rotenberg's
"Stroygazmontazh" and "Stroytransgaz" which 31% belongs to
Gennady Timchenko, mastered many years from a third to a half of the investment
program of the gas monopolist.
Rotenberg and Timchenko got under the American sanctions
therefore the Chinese direction is especially interesting to them. Ziyad Manasir
sold the shares in all companies of SGK group to the businessman Ruslan
Baysarov. The revenue of this company and "Stroygazmontazh" following
the results of 2013 fell to a third – to 260 billion and 227 billion
respectively. "Gazprom" systematically reduces year after year the
investment program therefore builders of gas pipelines expected start of the
new large project "Power of Siberia" with big impatience.
As well as in a case with suppliers of pipes,
"Gazprom" began to select contractors for construction in a new way,
having started system of prequalification of contractors on kinds of activity
two years ago. The company wishing to participate in competitions on
construction of pipelines, compressor stations, arrangement of fields has to
provide to "Gazprom" a packet of the relevant documents previously.
The passable prequalification is valid within a year.
If to look in the register of suppliers of "Gazprom",
there will be neither SGK, nor "Stroytransgaz" – only Arkady
Rotenberg's "Stroygazmontazh". "It is a technical slip, – the
representative of SGK Victoria Mironova believes. – We sent all necessary
documents in time". Contrary to usage, contractors for construction of
"Power of Siberia" and arrangement of the Chayandinsky field need to
pass separate prequalification on these objects – its results are not published
yet.
Anyway, the contract only so far connected with "Power of
Siberia" in September received "Stroytransgaz" – he will build
the mooring for reception of heavy and construction freights on the Lena River
in the settlement of Peliedui worth 1,5 billion rubles. Absence of
"Stroytransgaz" in the list of the contractors who passed
prequalification did not prevent the company to receive this contract actually
without competition: it was declared, but subsequently is cancelled.
According to the source RBC close to one of construction
contractors, to meetings in "Gazprom" concerning "Power of
Siberia" and discussion who what section can assume, invited
representatives of all three companies. However, it is not played any large
tender yet. Both the customer, and builders prefer to keep silence. Top
managers of construction companies refused to talk to RBC about "Power of
Siberia", but contractors prepare with might and main.
"We transferred two complex technological streams to the
area of future construction, – Mironova speaks. – More than 400 units of our
equipment are in Lensk and Ust Kut". In September
"Stroytransgaz" won the tender "Gazprom dobycha Noyabrsk",
"daughters" of "Gazprom" who is engaged in arrangement of
the Chayandinsky field, on a construction of roads 154 km long with a cost of
18,5 billion rubles. Formally with "Power of Siberia" it is in a row
not connected, and Chayand's word in the description of purchase is changed to
Chayand.
7.
Will cost how many the project?
In September at a press conference in Yuzhno-Sakhalinsk the
deputy chairman of board of "Gazprom" Alexander Medvedev declared:
"The question with receiving the Chinese advance payment for "Power
of Siberia" hung in mid-air so far". When the parties agreed about
the transaction, it was supposed that China will pay in the advance payment $25
billion from which the Russian gas concern will be able to finance construction
of infrastructure. But Chinese with assignment do not hurry: the question of
granting the credit for the same sum is now discussed. In October of CNPC
suggested "Gazprom" to participate in investment into construction of
gas-distributing networks in the territory of China.
Convincing the Chinese partners to sign the contract, Vladimir
Putin spoke about possible zeroing of rates of MET for the fields which became
the resource base "Power of Siberia". In the fall
"Gazprom" addressed to the government with the sentence to defreeze
tariffs for gas that due to their indexation to finance construction of the gas
pipeline.
By EY estimates, the cost only of linear part of the gas
pipeline (without costs of arrangement of fields) makes $25 billion. The most
part of the Power of Siberia gas pipeline goes in an alignment with the ESPO
oil pipeline that facilitates building. Whether the project is capable to
finance independently "Gazprom"? There is one more risk factor. Gas
price at the request of "Gazprom" is attached to price of oil, and
oil becomes cheaper. It cannot be told about costs of construction.
If to hammer the phrase "Power of Siberia" in base of
purchases of "Gazprom", competition on shooting of the advertizing
movie about the project, which initial price – 20 million rubles will be the
first. RBC did not manage to be found out what specifically amount of works was
executed for 94 million rubles by subsidiary of "Stroygazmontazh" for
a ceremony of welding of the first joint: the press secretary declared that
they "prepared a platform".
"Experience shows that in Russia really too expensive build
pipelines, – Alexey Belogoryev from Institute of power strategy speaks. – If on
average in the world of 1 km of the gas pipeline costs 3–4 million, in Russia –
is almost twice more expensive". Mikhail Korchemkin believes that it would
be possible to save due to involvement of the Chinese contractors, but such
solution has influential opponents.
The Chinese mass media do not use the phrase "Power of
Siberia" – the project appears in them as east branch of the Russian-Chinese
gas pipeline. The western branch – that "Altai" which could deliver
from fields of Western Siberia 30 billion cubic meters of gas a year.
Negotiations on "Altai" are conducted more than ten years. It was
expected that the agreement will be signed in October, but it again postponed –
now to November.
Chinese plan to begin construction of own infrastructure of
"Power of Siberia" in 2015 and by 2018 to finish. What result the
combination of the Chinese slowness and Russian ability to inflate estimates,
difficult to assume can yield.
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