Liam Denning
It’s a potential prize fight for the ages: US “energy dominance” versus the Power of Siberia. A proposed pipeline to bring natural gas from Russia, across Mongolia and into northern China threatens to complicate President Donald Trump’s energy diplomacy, upend energy markets and even shape the artificial intelligence boom.
The apparent revival of the Power of Siberia 2 gas project during Russian President Vladimir Putin’s recent summit with Chinese leader Xi Jinping represents an enormous wildcard for the US gas sector. Together with mooted expansions of two other pipelines, this would open up 58 billion cubic meters per year (or 5.6 billion cubic feet per day) of capacity to feed Russian gas directly into China. To put that into perspective, it is equivalent to almost half the expected increase in Chinese gas demand over the next decade, and a quarter of the world’s extra demand overall.
More pertinently for the US, it would exacerbate and extend a looming glut in an energy sector at the heart of Trump’s “dominance” agenda: Liquefied natural gas. The US is the world’s biggest exporter of LNG already and is spearheading a huge expansion in liquefaction capacity. Energy Secretary Chris Wright said at a Council of Foreign Affairs event last week that he expects LNG to become the country’s single largest export.
The International Energy Agency’s latest long-term outlook, published late last year, had annual global demand for LNG rising by 144 billion cubic meters between 2023 and 2030. Yet, supply capacity is set to increase by almost double that amount. The industry’s great hope is that this glut will clear as demand keeps growing and the boom in export capacity tails off. Injecting 58 billion cubic meters of effectively stranded Russian gas into the equation would dash that hope.
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