China could be set for even more Russian gas as Gazprom begins testing a key supply hub to reroute energy from Europe

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Russia’s President Vladimir Putin and China’s President Xi Jinping.

  • Russia’s state-run Gazprom said Tuesday it is testing gas supplies in Kovykta, a key hub in east Siberia, per Reuters. 
  • Those supplies would head to China and continue Moscow’s efforts to reroute flows from Europe.
  • According to the report, Gazprom said Kovykta and new gas transport operations are set to come online in December.

Russian energy major Gazprom has began testing gas supplies from the Kovykta field in east Siberia, according to a Reuters report.

Those flows would head to China via the Power of Siberia pipeline and continue Moscow’s efforts to reroute natural gas away from Europe. 

The company said it expects Kovykta and new gas transportation operations to come online this December. 

The Kovytka test comes as Europe reduces its reliance on Russian energy due to Vladimir Putin’s war on Ukraine and after the Kremlin cut off gas flows on the Nord Stream 1 pipeline.

Meanwhile, Gazprom has been sending more supplies to China in recent years. At the end of 2019, Gazprom begin delivering gas to China out of the Chanayda field, which also uses the Power of Siberia.

In 2020, the state-run energy giant sent 4.1 billion cubic meters of gas to China, then 11 billion in 2021. For next year, that figure is expected to double, according to Reuters. Gazprom has even more room to ramp up deliveries as the pipeline has a nominal capacity of 38 billion cubic meters per year. 

Thanks to war-driven soaring energy prices this year, Gazprom is on pace for massive profits in 2022. In the first six months of the year, it reported record profits of 2.5 trillion rubles ($42 billion), which already beat the previous year’s $29 billion.

Barclays recently said that the company could use its cash to better insulate itself from Western sanctions. If it were to reduce foreign debts, which the bank predicts is likely, it could skirt obstacles posed by Russian capital controls and economic constraints from Europe.

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