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    Putin calls for new infrastructure to reroute energy exports


Currently around 70% of Russia's gas exports go to Europe.

by: NGW

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Putin calls for new infrastructure to reroute energy exports

Russian president Vladimir Putin has ordered his government to draft plans by the end of next month for new infrastructure to divert oil and gas exports that currently flow to Europe to Asia instead, in response to EU efforts to phase out Russian hydrocarbons purchases.

Europe receives about 60% of Russian oil exports and 70% of its gas exports, but the European Commission is set to propose restrictions on oil sales from the country as part of its sixth package of sanctions, due to be published next week. Ending reliance on Russian gas will be harder, although the commission has proposed a plan to slash imports by as much as two thirds within a year, and phase them out completely by the end of the decade.

Putin told the Russian government to formulate a plan by June 1 for new oil and gas pipelines, the expansion of eastern and northern ports, and the further development of the Northern Sea Route in the Russian Arctic.

While the majority of Russia's gas exports still flow to European markets, the country has been seeking to ramp up supplies in recent years to Asian markets through the construction of new LNG terminals and new pipelines. Currently, Russia can only send gas to Asian markets via the 38bn m3/year Power of Siberia pipeline, which delivered 10.5bn m3 to China last year, and the 17mn metric ton/yr Yamal LNG and 11mn mt/yr Sakhalin-2 LNG plants.

Russia's Gazprom signed a new deal with China's CNPC in February covering the delivery of an extra 10bn m3/yr of gas via a new pipeline to be built in the Far East. Deliveries are expected to reach the contractual level sometime in the mid-2020s. The two countries are also negotiating a contract for 50bn m3/yr of gas supply from the Russian Arctic to China via the proposed Power of Siberia 2 pipeline that would run through Mongolia.

Russia's third LNG export terminal, Arctic LNG-2, was due to be launched next year. But several financiers have pulled out and sanctions prohibit the delivery of certain equipment and technology to Russia's oil and gas industry, raising doubts about the project's timely delivery.