Russia fails to reach an agreement with China on “Siberian Power 2”
3 June 2024 13:07
Russia and China cannot agree on the terms of construction of the second line of the Power of Siberia gas pipeline. The main stumbling blocks are the price of gas and the volume of its supply. This is stated in the Financial Times article, according to "Komersant Ukrainian"
According to the newspaper, Beijing is demanding that the price of natural gas be set close to domestic Russian prices, which are heavily subsidised by the state. In addition, China is ready to buy only a small share of the planned annual capacity of the pipeline of 50 billion cubic metres.
Moscow considers such conditions unreasonable and unacceptable. The newspaper notes that Beijing’s tough stance underscores the Kremlin’s dependence on China’s economic support after the invasion of Ukraine.
The Power of Siberia 2 agreement was one of Putin’s three main requests to Xi Jinping during their recent meeting, according to the FT. In addition, the Russian leader also asked to expand the presence of Chinese banks in Russia and to ignore the upcoming peace conference with Ukraine.
For Gazprom, which ended last year with a loss of $6.9 billion, the project would improve its financial situation. So far, however, the parties have reached an impasse in the negotiations, which is why the CEO of the Russian monopoly did not even arrive in Beijing with Putin.
Power of Siberia-2
“Power of Siberia 2 (formerly Altai) is a projected gas pipeline between gas fields in Siberia and the Xinjiang Uygur Autonomous Region in western China. There, it can connect to the Chinese West-East gas pipeline, which will bring gas to Shanghai.
The planned length of the gas pipeline is about 6,700 km, of which 2,700 km are to pass through Russia. The preliminary cost of the project is USD 10-13.6 billion.
The project has been actively pursued in Russia for almost 10 years, but it is still in the preparatory stage. For all these years, Russia has been unable to reach an agreement with China on the volume and terms of future gas supplies, so the construction of the pipeline has been delayed and postponed.
