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Transcript of Gas Pipeline Briefing.docx
Gas Pipeline: Mongolia and China Briefing
Debate
Gazprom from Russia has been negotiating with China over gas price per 1,000 cubic
metres for the Altai pipeline, which was originally proposed in 2006. Russia is offering
$350-400 per 1,000 cubic metres, but China insists on $200-250 per 1,000 cubic metres.
In China’s advantage, they have landed energy resources from Central Asia, Australasia,
Southeast Asia, the Middle East, and North America. They also do not want West
Siberian gas for fear that Russia would use their proposed gas supply line to sell to
Europe. China has played its cards well biding its time in this deal, while Russia has
staunchly held onto oil indexation prices. 1
Current Situation
Across North Eastern nations, natural gas has increased significance with long-term
demand. The current problem is how nations should respond to the growing demand, and
secure a stable gas supply. China’s high gas demand comes from their quest to move
away from coal and towards clean energy, as it will make them look better for the global
audience and promote their high economic growth. Mongolia has been experiencing a
growing importance and presence. Currently, they are trying to expand gas opportunities
through their rich mineral resources. For all the countries in NAGPF, which are Japan,
China, South Korea, Russia, and Mongolia their goals are to develop natural gas
infrastructure, supply gas at competitive prices, and set up relevant regional cooperation. 2
Mongolia Today
Sanjaasuren Oyun from Mongolia’s parliament stated, “Whoever controls energy controls
everything”. For Mongolia’s future relationship with China they do not want to be a grab
bag for China who simply takes what they want at convenience. The Tavan Tolgoi
railway is being built to curb dependence on China, and give Mongolia alternative export
1 Hulbert, Matthew. "President Putin's Growing Gas Insanity." Forbes. Forbes Magazine, 29 Sept. 2012. Web. 04 June 2014.
2 Koyama, Ken. "An International Gas Conference in Mongolia." An International Gas Conference in Mongolia (2011): n. pag. Web. 4 June 2014.
routes to Japan and South Korea. For its future, Mongolia does not want to inherit the
Saudi Arabia model where a few families control the country and all the money.
Resource wise, coking a metallurgical coal used to make steel is plentiful in Mongolia,
which it hopes to export to China. The Gobi desert has enough resources to meet China’s
import needs in 2011 for the next 160 years. Value wise, the Mongolian Mining Corp in
2010 on the Hong Kong stock exchange sold $650 billion worth of stocks. Investors
bought 20% of the company based off the potential that Mongolia’s partnership with
China was estimated to produce. A 2011 nationwide poll was taken asking citizens who
Mongolia’s best business partner would be, and surprisingly China ranked last, while
Russia ranked first. Mongolia’s President Tsakhia Elbegdors related that his country must
balance the interests of China and Russia, while also nurturing close ties with the U.S. 3
Altai Pipeline
At a proposed 2,600 km to produce 30 billion cubic metres of gas for 30 years the Altai
pipeline’s biggest obstacle besides Russia and China’s price disagreement is that the
pipeline passes through China’s Kanas Nature Reserve and Siberia’s Ukok Plateau. These
places house rare plants, animals, ecosystems, and cultural sites. The pipeline would also
displace indigenous people such as the semi nomadic Telengit. It is also presumed that
this would accelerate the settlement of Han Chinese in Xinjiang and kick out the Uighur
minorities. 4
At $14 billion for construction, there is a debate to reroute the Altai Pipeline through
Mongolia to China to avoid the Kanas Reserve and Ukok Plateau. This would be
beneficial for Mongolia because gas could be siphoned off from the pipeline and brought
to power Mongolian cities and supply gas heat. However, adding another nation to the
Altai Pipeline plan would push back the 2015 expected date when gas supplies would
first arrive in China. 5
The Power of Siberia Gas Pipeline
3 Higgins, Andrew. "China, Rich with Coal, Seeks More next Door in Mongolia to Meet Its Energy Needs." Washington Post. The Washington Post, 16 July 2011. Web. 06 June 2014.
4 Letman, Jon. "Saving Shambala from a Russia-China Pipeline." - Opinion. Aljazeera, 7 Dec. 2011. Web. 06 June 2014.
Recently, China and Russia signed a $400 billion gas deal for 30 years worth of gas. This
Eastern route known as the Power of Siberia Pipeline has been in negotiation for a decade
similar to the Altai pipeline. Gas will come from Siberia’s Kovykta gas field in Irkutsk
and the Chayanda in the Sakha Republic. The pipeline will provide 38 billion cubic
metres of natural gas annually starting in 2018. The Western Altai pipeline route is still
on the table, but also still not a guaranteed deal. 6
References
5 Johnson, Jenny. "Gas Pipeline from Russia to China Threatens World Heritage Site." Gas Pipeline from Russia to China Threatens World Heritage Site. China Dialogue, 19 Dec. 2012. Web. 06 June 2014.
6 "Major Economic Boom Expected for Siberia in Gas, Construction and Trade between Russia and China." RSS. The Siberian Times, 22 May 2014. Web. 06 June 2014.
1. Higgins, Andrew. "China, Rich with Coal, Seeks More next Door in
Mongolia to Meet Its Energy Needs." Washington Post. The Washington
Post, 16 July 2011. Web. 06 June 2014.
2. Hulbert, Matthew. "President Putin's Growing Gas Insanity." Forbes.
Forbes Magazine, 29 Sept. 2012. Web. 04 June 2014.
3. Johnson, Jenny. "Gas Pipeline from Russia to China Threatens World
Heritage Site." Gas Pipeline from Russia to China Threatens World
Heritage Site. China Dialogue, 19 Dec. 2012. Web. 06 June 2014.
4. Koyama, Ken. "An International Gas Conference in Mongolia." An
International Gas Conference in Mongolia (2011): n. pag. Web. 4 June
2014.
5. Letman, Jon. "Saving Shambala from a Russia-China Pipeline." - Opinion.
Aljazeera, 7 Dec. 2011. Web. 06 June 2014.
6. "Major Economic Boom Expected for Siberia in Gas, Construction and
Trade between Russia and China." RSS. The Siberian Times, 22 May 2014.
Web. 06 June 2014.