Geo Political Risk, page-28

China Closes Deal for Power of Siberia 2 Pipeline

Fellow Elixir shareholders

I have been out of action lately having had open heart surgery which takes at least 2 months to recover from.A safety moment take away is that if you feel any of the standard warning signs for heart problems, see your GP/cardiologist and in this day and age it is amazing what can be done.

Anyway, I have been keeping an eye on Geopolitics, particularly the confrontation between Russia and NATO/US over their expansion towards the Russian Ukraine border as well as development of the relationship between Russia and China which is considered by many to now be a military alliance in all but name.It is my guess that the US recognizes that it will be difficult to split Russia and China and that instead they are attempting to weaken Russia sufficiently to pave the way to successfully destroy China as a Prime geopolitical player.

This makes today's u-tube by Alexander Mercouris a very interesting listen.


It's a bit long and the really interesting bit is towards the end.

Alex is a Barrister and not an Oil and Gas Expert (By his own admission) who does an amazing job of keeping up with high level Geopolitical meetings and reporting on them using diplomatic transcripts and official proxy reporting in papers such as the Global times as province.

There are all sorts of high-level meetings and Summits between countries such as Russia, China and India that receive little or no attention from Australian Media and many of which have significant geopolitical implications for global gas supplies.For those who are new to this forum, my previous post modelling the Elixir Mongolian may be helpful as background reading

https://hotcopper.com.au/threads/elixir-model-rev-90-and-comments.6220604/?post_id=55309895


Given the increasing certainty of the Power of Siberia 2 being built I see a number of implications for Elixir.

This onshore, gas pipeline, with a maximum diameter of 56 inches, will start in Yamalo-Nenets Autonomous Okrug (Russia) and ends in Inner Mongolia (China). The Power of Siberia 2 Project is expected to commence operations in 2030 and will be owned by China National Petroleum, and Gazprom.

The pipeline would run from the Bovanenkovo and Kharasavey gas fields in Yamal, Russia through Urengoy, Krasnoyarsk Territory, Irkutsk Region, Buryatia and Transbaikalia. It would pass close to Lake Baikal, crossing the border of Mongolia, pass by Ulan Bator, and go on to China.

I would be surprised if the Mongolian Govt does not do a deal with Gazprom on a really good rate for gas to service Ulaanbaatar as part of a significant gas transit deal.

The Chinese gas pipeline system including the West East pipelines would need to need to be upgraded.As far as I can see, much of this pipeline route would be relatively easy to construct which would translate into a shorter construction schedule. The initial published completion date is 2030,

As already covered, he Chinese are building additional pipeline capacity to Turkmenistan for more gas as it cuts Australian supplies,

https://hotcopper.com.au/threads/elixir-geopolitical-risk-and-reward.5850397/page-130?post_id=56716671

The upshot of this is that IMO the benchmark price for Mongolian CBM to China will IMO be related to competing conventional Russian and Turkmenistan gas + their respective haulage costs with Elixir geographically positioned very well to minimize the COP+ Haulage price.

In any case, construction of the Power of Siberia 2 through Mongolia IMO will be an important catalyst for the development of Mongolian CBM reserves.

Best Regards

OGP