Gazprom, Russia’s state-owned gas conglomerate, is reportedly moving forward with expensive technical design work for the long-delayed Power of Siberia 2 (PS2) pipeline to China.
The move could be a sign that the Kremlin believes the project may finally be regaining momentum despite a lack of public comments from the Chinese side.
After Moscow and Beijing signed a “memorandum of construction” in September, Gazprom engineers reportedly began preparing detailed technical documentation, three people said to be familiar with the work told the Financial Times (FT).
The studies appear to mark the front-end engineering design phase – an extensive process involving “hundreds of volumes” of technical papers, said Sergey Vakulenko, a former strategy chief at Gazprom Neft and now a senior fellow at the Carnegie Endowment.
Such work is costly, according to Vakulenko, who estimated the design phase alone could amount to 5 percent of the total project cost, while a senior Russian energy executive told the FT it could be as high as 10 percent.
“Such spending is unusual, unless there is a strong belief that the money is being well spent and that the investment is safe,” the executive said.
The new pipeline – intended to deliver 50 billion cubic meters of gas annually – is Russia’s only serious option to offset part of its collapsed gas exports to Europe.
Analysts cited by the FT said the upper end of the total cost could exceed $30 billion, though the final figure may be lower.
The pipeline would stretch 6,700 km (4,163 miles), including 2,700 km (1,678 miles) inside Russia from the depleted Yamal fields, around 1,000 km (621 miles) through Mongolia, and the rest into northern China.
