FT: China demands from the Russian Federation supplies via Power of Siberia-2 at domestic gas prices
Negotiations between Russia and China on the “Power of Siberia-2” have reached a dead end due to the principled position of Beijing, which wants to buy natural gas at the domestic Russian price. This state of affairs became known to the Financial Times (FT).
According to sources, it is noted that the PRC does not intend to make concessions on this issue and does not plan to overpay for future supplies of Russian gas along this route. Another reason for the delay in negotiations was China’s reluctance to purchase a lot of fuel through the Power of Siberia-2.
Beijing’s planned imports represent a small portion of the pipeline’s annual capacity of about 50 billion cubic meters. Thus, the prospect of reaching a final supply agreement is in doubt.
Photo: Pavel Lvov / RIA Novosti
Putin and Xi Jinping discussed “The Power of Siberia-2”
As the FT wrote, one of the main topics of negotiations between Russian President Vladimir Putin and Chinese President Xi Jinping during the Russian leader’s visit to China from May 16 to 17 was, among other things, gas. According to sources, the parties discussed the construction of the Power of Siberia-2 gas pipeline.
Meanwhile, Bloomberg noted that Putin’s visit to Beijing did not bring any changes in the issue of building the Power of Siberia-2, with the help of which Moscow would like to compensate for the loss of most of the premium European market. As the publication noted, the situation clearly demonstrates that China, thanks to its energy advantage, dictates the conditions in this matter.
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At the same time, the Russian side says that both countries are interested in the project, and they intend to conclude an agreement soon.
We also plan to soon complete the review and sign a contract for the construction of a gas pipeline with a capacity of 50 billion cubic meters of gas through the territory of Mongolia. There are also other new projects
Experts explained why China will delay the construction of Power of Siberia-2
Last May, experts interviewed by the Financial Times noted that China would delay the construction of Power of Siberia-2 for the sake of low gas prices.
Beijing has experience of delaying negotiations in order to conclude a more profitable deal – this was the case when negotiations were underway on Power of Siberia-1.
She explained that this option is supported by the fact that the special operation in Ukraine has dragged on, and Beijing may not rush to implement the project in order to get a better price offer, since Russia does not have alternative fuel sales channels.
Design of the Power of Siberia-2 gas pipeline began in 2020; it will run from Russia through Mongolia to China. The approximate length of the pipeline will be about 6.7 thousand kilometers, of which 2.7 thousand kilometers will pass through Russian territory. In March 2023, Putin said that almost all the parameters of the agreement on a new gas pipeline from Russia to China through Mongolia had been agreed upon.
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