I like pipelines. Elegant contraptions, really—great for shoving vast quantities of stuff from one place to another. Natural gas is a prime example. But one of the more stubborn fairy tales still clinging to the gas business is that pipelines are somehow “cheap” while LNG is the extravagance of fools. In reality, pipelines are anything but a free ride.
Neither Russia nor China owns a magic wand that makes the cost of building and operating such behemoths evaporate into the ether. Power of Siberia 1 was political from the day it was sketched on the napkin. Its gas comes stitched together from scattered fields across Eastern Siberia—a logistical headache with a hefty price tag—and then must be shoved over a vast expanse, through compressor stations and the whole metallic menagerie that keeps such a serpent alive.Rumor has it Russia never actually made money on PoS 1. They’d need something vastly better for a sequel, but with China holding the buyer’s whip hand, “better” is a pipe dream in the truest sense. Don’t hold your breath—you might need that oxygen while you wait for the next miracle pipeline to pay for itself.