【SCI View】CRWP Seeking Pass through Mongolia

CRWP Seeking Pass through Mongolia

China Russia West Pipeline is reported to make a path through Mongolia with higher possibilities, according to TASS. The Russian Ministry of Energy and Gazprom were instructed to set up a working group to prepare a feasibility study of a gas pipeline via Mongolia to China after Russia President Putin visited Mongolia in September, and since the commissioning of CREP on December 2, the preliminary work for CRWP was brought onto the table seemingly.

Deputy Prime Minister Alexei Gordeev said on December 6 after the initiation of China Russia East Pipeline, "It was stated that the working group will be set up now, which will prepare the feasibility study. The economic feasibility of the project remains among core issues. Nevertheless, the Russian side intends to seriously consider this project at the level of the Russian President and appropriate instructions were issued for the Energy Ministry and Gazprom."

As shown in the chart below, CRWP was planned for years, and the path was set to enter the border through Russia’s Gorno-Altaisk and China’s Altay so to utilize Russia’s West Siberia’s existing pipelines and adequate production capacity. However, in September 2019, Russia President Putin proposed an alternative route when visiting Mongolia, the trans-Mongolia pipeline, to make it more feasible and reachable in a near future, as a Mongolia pipeline would be much shorter than Altay route and closer to the developed eastern side of China rather than to cross nearly the whole nation from west to east.

On the other side, CNPC is showing less and less interest in this prospective pipeline. The company, as China’s largest natural gas grid operator, is bothered by the 500 billion RMB level asset transfer to the new national pipeline operator COGPC nominated by the government, and before that, the sufficient supply of natural gas in China is harming CNPC’s enthusiasm on a new import main pipeline. Together with the consideration of geopolitics, preliminary negotiation and construction progress, SCI holds that the CRWP will not pump to China before 2023’s winter, and if no major supply shortage happens in the next several years, the commissioning may be delayed to 2024 o 2025.

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