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Russia's Gazprom eyes capacity increase on China gas export link

Highlights

Plans completion of second compressor station in 2020

To boost Chayandinskoye capacity to full 25 Bcm/year

Chayandinskoye-Kovykta pipeline work to start in Q3

London — Russia's Gazprom is working to boost the capacity of its landmark gas pipeline to China -- the Power of Siberia -- as it looks to ramp up flows via the line.

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The pipeline, whose design capacity is 38 Bcm/year, started commercial flows at a rate of some 10 million cu m/d in December last year and will increase flows gradually over the coming years.

Gazprom said in a statement it continues to ramp up its production and gas transmission capacities in the east of the country to boost flows to China, including bringing production at the pipeline's main source -- the Chayandinskoye field -- to its maximum.

"At Chayandinskoye, the company is setting up the facilities required to bring the field to its design annual output of 25 Bcm of gas," Gazprom said.

It also plans to complete the construction of the second compressor station on the Power of Siberia line, named Ivan Moskvitin, before the end of 2020.

The Power of Siberia underwent two weeks of planned maintenance that started on March 16 and was completed on March 31, which coincided with China's PetroChina declaring force majeure on some import obligations due to the coronavirus outbreak.

Kovykta work

As Gazprom looks to bring the Power of Siberia to its 38 Bcm/year capacity, gas from the Kovykta field will be added to the flow from the end of 2022.

"Production drilling is in full swing at the Kovykta field. Seven drilling rigs are currently in operation, and their number is going to be raised to 18 next year," Gazprom said.

Kovykta -- which was discovered in 1987 but left undeveloped despite several changes in ownership -- will be key to topping up supplies for the key Chinese pipeline as it ramps up.

Gazprom has said exports to China are expected at a level of some 5 Bcm/year in the first year of operations through the Power of Siberia.

In the second year of operations -- 2021 -- supplies are expected to ramp up to 10 Bcm before then increasing to capacity in the mid-2020s.

Kovykta's reserves have been estimated at some 2 trillion cu m.

Gazprom said it plans to start building the pipeline section between Kovykta and Chayandinskoye in the third quarter of 2020.

There are also plans for a 50 Bcm/year pipeline from Russia via Mongolia to northern China which were signed off by Russian President Vladimir Putin last month.

Gas storage

Separately, Gazprom also said it plans to boost its Russian gas storage capacity over the coming 10 years, with a target of having withdrawal capacity of more than 1 Bcm/d by 2030.

Since 2010, Gazprom has increased its Russian gas storage capacity by 36% and can now withdraw at 843 million cu m/d.

"Work continues in this area -- by the 2030-2031 withdrawal season, it is planned to raise daily deliverability by approximately 200 million cubic meters," it said.

This would mean daily withdrawal capacity of as much as 1.04 Bcm/d.

"Increasing the flexibility of the gas storage system by creating peak storage facilities of relatively small volume but with high deliverability is among Gazprom's key tasks in the area of underground storage," it said.

It said it plans to expand the Kaliningradskoye and Volgogradskoye storage facilities and will soon begin building the Shatrovskoye gas storage facility.

A new storage site is also in the design phase in the Republic of Tatarstan.

"In the future, Gazprom plans to establish new gas storage facilities in the Northwestern, Siberian and Far Eastern Federal Districts. At present, geological exploration is underway at several prospective sites," it said.