(Source: http://www.gazprom.ru/press/reports)

Russia may begin to supply gas to South Korea via gas pipeline through the territory of China.

The experts of the sector remind that this project has already been discussed, and then all participants expressed distrust to China, expecting the repetition of the Russian-Ukrainian situation. Meanwhile, the supplies via pipeline can closely bind South Korea to Russia, and in this light all risks are justified, according to political analysts. Russia considers the option of gas supply to South Korea via pipeline through the territory of China. This was told by the Head of the Russian Ministry of Energy Aleksandr Novak. He also noted that the priority option is the export of liquefied natural gas (LNG) from the plants “Gazprom” (Vladivostok) and “Rosneft” (Sakhalin).

However, according to the estimates of Korean experts, supplies via pipeline will cost on average 30 % cheaper than LNG transportation. “We offered two options of the project. The first one was the construction of a pipe through China laying it along the bottom of the Yellow Sea to South Korea. And the second one was the laying of a pipe directly to South Korea from Vladivostok along the bottom of the Pacific Ocean” – Novak told. The second option was rejected by “Gazprom” because of the rugged bottom topography, deep waters and a small amount of supply (only 10 billion cubic meters). These factors made the project unprofitable, and it is not considered now, according to Novak.

At the same time, the first option is at the development stage, for it affects the transit China as well. In addition, the option of laying the pipe by land through North Korea was previously considered, but “Gazprom” rejected it as well, because of political risks. “Gazprom” refused to comment on Novak’s message, but, according to a source from inside of the sector, the company currently does not consider any pipeline projects of gas supply to South Korea, focusing on LNG. “Liquefied natural gas is really a priority for South Korea, the country is the second largest LNG consumer in the world (after Japan)  purchasing about 40 million tons (or about 56 billion cubic meters) and possesses a developed infrastructure for receiving liquefied natural gas” - the leading expert of the Union of Oil and Gas Producers of Russia Rustam Tankaev assumes.

“The Republic of Korea is not interested in pipeline projects; moreover, the South Koreans do not treat the Chinese as reliable partners.” According to Tankaev, the project of laying the pipe to South Korea through China was considered in the early 2000s, and even at that time it wasn’t a new one. “Then it turned out that none of the participants of the project believes that the Chinese will allow a free flow of contracted volumes” - the expert emphasizes. “All participants came to the conclusion that the situation will be the same as between Russia and Ukraine.”  

By the way, Russia is still unable to agree with the Chinese on gas supplies to People’s Republic of China itself. The negotiations already last several years, but the issue of price has not yet been resolved. Earlier it was reported that “Gazprom” plans to enter into a definitive agreement with China during the visit of the Russian President Vladimir Putin to the country in May. However, prior to that “Gazprom” stated that the company intended to sign the contract in February.