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CPECC's Russian deal to secure gas supplies

By Zheng Xin and Zheng Yiran | China Daily | Updated: 2017-04-14 09:20

China Petroleum Engineering & Construction Corp recently signed an EPC-engineering, procurement and construction-project contract with Russian gas giant Gazprom to take part in construction of the Amur gas processing plant, a move which will secure domestic gas supplies.

Investment in the project is estimated to total $15 billion to $20 billion, and construction will take eight years.

After the project is completed, the plant's annual capacity will reach 42 billion cubic meters of gas, and up to 38 billion cu m will be transported to China.

The Amur gas processing plant is one of the key projects by Gazprom to ensure supply of natural gas to China via the eastern route of the China-Russia natural gas pipeline. Analysts said the project is of great strategic importance to the supply of clean energy to China.

"The AGPP is a typical project along the Belt and Road Initiative. It combines engineering and sales contracts, and Chinese financial institutions are offering financing plans, providing necessary support for the project," said Li Li, energy research director at ICIS China, a consulting company that provides analysis of China's energy market.

Russia is at a prominent position along the Belt and Road Initiative. It has a huge market, and its future development is promising. Eight renowned companies from Asia and Europe took part in competitive bidding for the AGPP project. Because of its advantages in previous performance, price and design, China Petroleum Engineering & Construction Corp finally succeeded in winning the contract.

During the contract signing ceremony, Hou Haojie, general manager of China Petroleum Engineering & Construction Corp, said: "We see this project as an opportunity to further explore the market along the Belt and Road Initiative."

The energy supply-demand relationship between China and Russia is continuously developing. During the past 10 years, Russia's crude oil supply to China has increased seven times. In 2016, Russia's crude oil export to China surged by 24 percent, replacing Saudi Arabia to become the largest crude oil supplying country.

The AGPP project includes three phases, the first of which is the designing process. The second phase, which China Petroleum Engineering & Construction Corps is responsible for, includes the engineering, procurement and construction of the plant. The third phase is a public construction project. At present, the construction process of the first phase and the bidding process of the third phase have almost come to an end.

Contact the writers at zhengxin@chinadaily.com.cn

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