Key information
- Russia is planning a new gas pipeline to China via Kazakhstan, with an estimated capacity of 35 billion cubic meters per year.
- Although natural gas represents only 2.8 percent of China’s overall energy mix, demand for natural gas in the country is increasing due to demand for district heating, industrial expansion and a national initiative aimed at replacing diesel trucks with LNG.
- The new pipeline would be crucial for Russia to strengthen its ties with Beijing, but China is unlikely to become solely dependent on Russian gas due to its long-term strategic play in the global energy market.
Russia plans to build a new gas pipeline to China via Kazakhstan, with an estimated capacity of 35 billion cubic meters (bcm) per year. The announcement by Deputy Prime Minister Alexander Novak highlights Moscow’s growing dependence on Beijing as a key energy customer. This year alone, Russia has already supplied 40 billion cubic meters of gas to China, consolidating its position as the Kremlin’s leading energy partner in the wake of strained relations with Europe.
Although it represents only 2.8 percent of China’s overall energy mix, natural gas is gaining ground in the country. China’s domestic consumption increased by 8.8 percent in the first eight months of the year, reaching 283 billion m3. This growth is driven by a variety of factors, including demand for district heating, industrial expansion and a national initiative to replace diesel trucks with liquefied natural gas (LNG). Projections indicate that demand for natural gas in China will increase by more than 50 percent by 2040.
China’s energy dynamics
However, it is important to note that coal remains the dominant energy source in China, accounting for almost 60 percent of its energy mix. Natural gas, although growing in importance, still occupies a relatively minor place compared to coal.
Kazakhstan, located along the Caspian Sea, recognizes the potential for expanding gas exports to China. Currently, annual gas shipments from Kazakhstan to China amount to only 4 billion m3. This new gas pipeline would be essential to allow Russia to strengthen its ties with Beijing and offset revenue losses due to reduced trade with Europe.
Russia’s strategic dilemma
However, it is unlikely that China will become solely dependent on Russian gas. China’s energy strategy consists of using competition to obtain favorable prices. Driven by its growing demand, China continues to play a long-term strategic game in the global energy market, while Russia must evaluate whether this latest investment will produce significant returns.
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