Vladimir Putin visits gas project which will export to China

Amur is Russia’s biggest gas-processing plant and will help diversify from trade with West

Vladimir Putin visited a vast new gas project on Thursday that will reinforce his country's prowess as a global energy power, just days after the US enacted yet tighter sanctions on Russia.

Taking time out from a brief fishing holiday in Siberia, Mr Putin travelled to the Amur region in the far east of the country where a huge industrial plant is being built to process gas for export by a new pipeline to China.

Looking relaxed and suntanned, Mr Putin said the 42 billion cubic metres a year Amur facility was the biggest gas-processing plant ever built in Russia, even in Soviet times.

“This is a very powerful step not only for the development of the [gas] industry but for the development of the whole of the far east of our country,” he said in an address to local Russian officials and industry leaders published on the Kremlin website.

The Amur plant is the centrepiece of a multibillion-dollar project that will see the development of a clutch of Siberian gas fields to feed a new export pipeline to China to help Russia access the world’s fastest-growing energy market and diversify its gas trade away from Europe.

Russia signed the 30-year gas export deal with China in May 2014 as western governments began imposing sanctions to punish the Kremlin for annexing Ukraine's Crimea. Moscow and Beijing have increased trade and investment co-operation since then, with Chinese companies securing oil and gas deals that are the envy of their western counterparts.

US lawmakers voted to tighten Russia sanctions last week as politicians of all colours in Washington continued to fume over alleged Kremlin meddling in the presidential election that brought Donald Trump to power. The same Bill codified sanctions to deprive the president of the power to lift the measures without Congress approval.

Reprisals and ‘insults’

Mr Trump reluctantly signed the Bill into law on Wednesday, but not before Mr Putin had announced retaliatory measures including the expulsion of hundreds of US diplomats from Russia.

Russian patience with US reprisals and “insults” was exhausted, he said.

Dmitry Medvedev, the Russian prime minister, responded to the US sanctions in a more emotional fashion, slamming the US on Wednesday for launching a "full-scale trade war" against Russia that had dashed "hopes of improving our relations with the new US administration".

In a diatribe posted on Facebook, Mr Medvedev said the Trump administration had "shown its total weakness by handing over executive power to Congress in the most humiliating way".

Russian energy companies stand to suffer most from the new US sanctions that build on the earlier penalties to target the financial, the oil and gas sectors, the main source of Russian export revenues.

US sanctions

Mr Putin’s visit to the Amur on Thursday appeared designed to signal that Russia was turning east for trade and investment and its flagship gas project would not be harmed by the tighter US sanctions regime.

Russia’s powerful state energy companies underscored the message that the US reprisals would not work.

Nikolai Tokarev, the chief executive of Transneft, the Russian state oil pipeline monopoly, said the company would be untouched by the sanctions as it had no need to borrow internationally and sourced most of its equipment domestically.

The Chinese Investment Corporation had recently proposed making an equity investment in Transneft , Mr Tokarev told the Prime news agency on Thursday, and it was “very likely” the Russian company would acquire additional Chinese partners.

Igor Sechin, the president of Rosneft, Russia's state oil company, said the sanctions – which in their earlier incarnation forced US Exxon to abandon a huge oil exploration venture in the Russian Arctic – would backfire against the US yet again.

A move by the US treasury last month to fine Exxon $2 million (€1.7 million) for its disregard of sanctions in 2014, when secretary of state Rex Tillerson was still the oil major's chief executive, was a sign the sanctions were beginning to work against those that impose them, Mr Sechin told Tass. "That's positive," he added.