Russian President Vladimir Putin and Chinese leader Xi
Jinping have met in Moscow for two days of talks,
during which they discussed a major new infrastructure project,
Power-of-Siberia 2, to deliver gas to China via Mongolia.
Putin said Russia, China and Mongolia had completed “all
agreements” on finishing the pipeline to ship Russian gas to
China, and that Russia will deliver at least 98 billion cubic
metres (bcm) of gas to China by 2030, although a subsequent
Russian statement said pipeline details still need to be
resolved.
Russia proposed the route years ago but the plan has
gained urgency as Moscow looks to Beijing to replace Europe as
its major gas customer.
However, China is not expected to need additional gas supply
until after 2030, experts say.
What is the Power-of-Siberia 2 pipeline?
The proposed pipeline would bring gas from the huge Yamal
peninsula reserves in west Siberia to China, the world’s top
energy consumer and a growing gas consumer.
The first Power-of-Siberia pipeline runs for 3,000 km through Siberia and into China’s northeastern
Heilongjiang province.
The new route would cut through eastern Mongolia and into
northern China, according to a map by Russia’s Gazprom
.
Gazprom began a feasibility study on the project in 2020,
and has aimed to start delivering gas by 2030.
The 2,600-km pipeline could carry 50 billion cubic metres
(bcm) of gas a year, slightly less than the now defunct Nord
Stream 1 pipeline linking Russia to Germany under the Baltic
Sea.
What did Xi and Putin say about the pipeline?
Before Xi’s visit, Putin referred to the
Power-of-Siberia pipeline as “the deal of the century.”
But a joint statement after their talks said only that
the parties involved “will make efforts to advance work on the
study and approval” of the pipeline. However, official accounts
of Xi’s statements issued after the meetings do not mention the
pipeline.
“We don’t really think it’s finalised yet, there are still
lots of finer details to be hammered out,” said Wang Yuanda,
China gas analyst at data intelligence firm ICIS.
“Russia is probably more desperate to sell gas than
China needs at the moment.”
What does Mongolia say?
When Putin and Xi met in September with Mongolian President
Ukhnaagiin Khurelsukh, Khurelsukh said he supports the
construction of oil and gas pipelines from Russia to China via
Mongolia, adding that its technical and economic justification
should be studied.
Mongolian Prime Minister Oyun-Erdene Luvsannamsrai told the
Financial Times in July that he expected Russia to begin
construction on the pipeline within two years, but added that
the final route through Mongolia was not yet decided, according
to the newspaper.
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Does China need more Russian gas?
Gazprom already supplies gas to China through the first
Power-of-Siberia pipeline under a 30-year, $400 billion deal,
which was launched at end-2019.
Expected to supply 22 bcm of gas in 2023, it will deliver
increasing volumes before reaching full capacity of 38 bcm by
2027.
In February 2022, Beijing also agreed to buy gas from
Russia’s Far East island of Sakhalin, which will be transported
via a new pipeline across the Sea of Japan to China’s Heilongjiang
province, reaching up to 10 bcm a year around 2026.
Meanwhile, China is negotiating a new pipeline – Central
Asia–China Gas Pipeline D – to source 25 bcm of gas annually for
30 years from Turkmenistan via Tajikistan and Kyrgyzstan.
Additionally, China has long-term contracts with Qatar, the
United States and global oil majors for LNG supplies. It
imported 63.4 million tonnes of the chilled fuel last year.
“The original target is for China to import 38 bcm of Russia
gas by 2025. Now Russia is saying this will reach 98 bcm by
2030. That is a very big jump, so it pays to be slightly
cautious on that,” said Wang, the analyst.
China will also be wary of finding itself in a similar position to Europe if it becomes more reliant on Russia, he added.
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