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77 2.2. RUSSIAN-CHINESE COOPERATION IN THE OIL AND GAS SECTOR: PROSPECTS AND CHALLENGES
ical tasks but having no actual production projects, into
one of the most powerful actors in the region. To name
but a few of the companie’s achievemts: Gazprom
acquired Sibneft, which held prospective assets in eastern
Russia; using environmental firepower”, became the
majority shareholder of the Sakhalin-2 project; reached
an agreement with TNK-BP regarding the Kovykta
field; squeezed Rosneft out of the West Kamchatka
shelf; acquired, without an auction, the Chayanda field
in Yakutia, as well as the Ayashsky and East Odoptinsky
blocks of the Sakhalin-3 projects. In the summer of
2009, Gazprom updated its forecasts regarding gas production
at the Chayanda field, saying it would not be
sufficient for ensuring the “optimal load” of the Yakutia
— Khabarovsk — Vladivostok pipeline, via which the
eastern gas will be transported to the Asia-Pacific
regions. The company believes it needs four more
licenses in Yakutia.
In 2009, the construction of the Khabarovsk — Vladivostok
section of the Sakhalin — Khabarovsk — Vladivostok
gas transportation system was commenced. The
project is slated for completion in late 2011. The
monopoly will use the pipeline to export gas to South
Korea and China43 . The first phase of the system will
consist of a 1,350 km long pipe with a capacity of 6 bcm
per year. Once the whole system is constructed, it will
transport as much as 30 bcm gas from Sakhalin annually.
According to Gazprom, the project will help both
meet the growing demand for gas in the Russian Far
East and create additional facilities for gas exports to the
Asia-Pacific countries44 .
Gazprom also has attempted to establish control over
gas exports from the Sakhalin-1 project, in particular,
intending to use its Sakhalin — Khabarovsk — Vladivostok
pipeline for exporting the gas. Although Rosneft,
the state-controlled oil powerhouse, also participates in
Sakhalin-1, the company faces problems stemming
from Gazprom’s intention to preserve the single integrated
export channel.
Rosneft, which has the right to export gas from
Sakhalin-1 independently from Gazprom since the
project is implemented under PSA terms, is considering
various export markets, including China, Japan,
and South Korea.
However, Gazprom has a vital interest in Sakhalin-1 gas.
Though the Law on Gas Export, adopted in July of
2006, strengthened Gazprom’s position as the exclusive
gas exporter, the company has not yet been able to
become a leading player in the Russian Far East. Therefore,
when Exxon Neftegas signed, in October of 2006,
a preliminary agreement with CNPC to construct a
900km pipeline running from Sakhalin to Northeast
43 Oil and Capital, No. 7-8, 2009, pp. 17—18.
44 http://www.gazprom.ru/production/projects/east-program/
45 Vedomosti, June 20, 2007.
China with a throughput of 8 bcm/year, Gazprom
strongly opposed the plan.
In the summer of 2007, Alexander Ananenkov, deputy
chairman of Gazprom, declared that gas from Sakhalin-
1 had to be delivered to the domestic market, estimating
the demand of four regions of the Russian Far East
at 15 bcm per year. “We consider it necessary to adopt
a directive ordering sales of Sakhalin-1 gas to Gazprom
with the aim of improving gas supply to Russian regions,
instead of exporting it, as ExxonMobil wants,” he stated
unambiguously45 .
The desire to control all gas produced at Sakhalin-1 is
not so much driven by Gazprom’s care for Russian
regions, as by the monopoly’s intention to export gas to
China itself. Gazprom does not need any competition
from ExxonMobil, since the agreement with participants
in the Sakhalin-1 project gives Chinese companies
more leverage in their negotiations with Gazprom.
Over recent years, relations between Gazprom and
China have expanded rapidly. First, a strategic cooperation
agreement between Gazprom and CNPC was
signed on October 14, 2004.
Then, during the March 2006 official visit of Vladimir
Putin to, leaders of Gazprom and CNPC signedthe
Protocol on natural gas supplies from Russia to China.
At that time it was expected that shipments would start
in 2011, and in the future China would import up to 68
bcm of gas from Russia.
The 2006 agreement was an important step forward in
implementing Russia’s plans to diversify its gas export
markets, which until recently had been focused only on
Europe; it was also in line with the Russia’s general
desire to establish closer ties with countries of Northeast
Asia. However, it was unclear whether Gazprom would
have enough gas to meet its long-term export commitments
to European customers and satisfy the growing
domestic demand, while at the same time ensuring gas
supply to new customers in China.
Gazprom intended to transport gas to China via two
pipelines: the western one (the “Altai” project); and the
eastern one — the gas was supposed to be delivered to
Harbin via an offshoot of the Sakhalin — Khabarovsk —
Vladivostok pipeline.
Plans were to transport some 30 bcm per year via the
future “Altai” pipeline. The main advantage of this
route was a relatively short distance from the end-consumer
(China is much closer to Russia than Europe)
with no transit countries involved.
During the first phase of the project of the project, plans
were in the works to build a new 2,800km long pipeline