Mongolia is calling upon China and Russia to re-direct a planned natural-gas pipeline across its territory as the world’s fastest growing economy seeks to tap the cleaner-burning fuel. Altering the route to pass through Mongolia would save 1,000 km of pipeline, President Ts.Elbegdorj said in an interview. It would also allow Mongolia to switch to gas heating in Ulaanbaatar, which ranks among the world’s most polluted cities due to widespread use of coal-fired stoves. “This is economically beneficial,” Elbegdorj said. “We are trying to persuade our two neighbours not to exclude us from that project. The Chinese side has already agreed to discuss this and also the Russian side.”
Russia has discussed a gas pipeline to China, the world’s gest energy user, for almost a decade without reaching a final agreement. Mongolia, squeezed between Russia and China, is struggling to end power shortages that threaten to hold back the development of the country’s resources industry, which helped its economy grow 17.3 per cent last year.
Rio Tinto Group (RIO), the gest foreign investor in Mongolia, is due to begin importing power from China this year to help run OyuTolgoi. Western Mongolia runs entirely on electricity imports from Russia.
OAO Gazprom (GAZP), the world’s gest gas company, has yet to agree with state-run China National Petroleum Corp. on the starting price of supplies, according to Alexander Medvedev, deputy chief executive officer of the Moscow-based gas producer.
Dmitry Peskov, a spokesman for Russian President Vladimir Putin, said he isn’t aware of the proposal to run the pipeline via Mongolia. “We are staunch supporters for energy transportation routes to be based solely on economic feasibility criteria,” he said in a phone interview. Sergei Kupriyanov, a spokesman for Gazprom, didn’t reply to a text message.
Gazprom plans to supply about 30 billion cubic meters a year, less than a quarter of China’s consumption in 2011, via the so-called Western route. The pipeline would take gas from Gazprom’s gest western Siberian fields directly to western China through a border line squeezed between Kazakhstan and Mongolia. The plans have been questioned by analysts as China needs most of its gas for its more populated and industrially developed eastern territory, meaning the route will span a longer distance to reach customers.
Gazprom has suspended plans to build a link from eastern Siberia, which would be shorter than the western route, in favour of producing liquefied natural gas for shipment by tanker from Pacific ports, according to CEO Alexey Miller. Gazprom and China are discussing advance payments for fuel supplies, which may lower the price, as well as a potential role in marketing and distribution in China and LNG shipments.
Mongolia plans to form a trilateral working group to study changing the gas route, Elbegdorj said. Thenation, which relies on Russia for almost all of its oil supply, is also working on introducing technologies that would allow it to produce the fuel and also gas from coal. Elbegdorj oversaw the signing of accords with German companies that will help Mongolia produce its own fuel from coal reserves, he said.
China’s gas consumption increased 22 percent to 130.7 billion cubic metres last year, according to BP’s Statistical Review of World Energy. Mongolia hasn’t been singled out as a consumer of the fuel in the review.
(From a report published by Bloomberg.)