RUSSIA agreed to supply more natural gas to China and signed a memorandum on building the vast Power of Siberia 2 pipeline, but has yet to agree on pricing for one of the world’s most expensive gas projects, Gazprom said yesterday.
The ‘no limits’ partnership between China, the world’s biggest consumer of energy, and Russia, the world’s biggest producer of natural resources, has strengthened since the West imposed sanctions to punish Russia for the war in Ukraine. By deepening ties with his “old friend” Russian President Vladimir Putin, Chinese President Xi Jinping is showing he can resist US pressure to turn its back on Moscow.
However, the lack of progress on pricing for Power of Siberia 2 indicates that he is also demanding steep discounts from Russia. Since losing a lucrative chunk of the European gas market, Russia has pivoted towards China. Gazprom has been seeking an agreement for years on the Power of Siberia 2 pipeline, capable of delivering 50 billion cubic metres (bcm) per year to China through Mongolia from the Arctic gas fields of Yamal.
Alexei Miller, the CEO of Gazprom, told Russian news agencies that an agreement had been reached to increase supplies via the existing Power of Siberia pipeline, which runs from Eastern Siberia to China, to 44 billion cubic metres (bcm) a year from 38 bcm.
“Today, a legally binding memorandum was signed on the construction of the Power of Siberia 2 gas pipeline and the Soyuz Vostok transit gas pipeline through Mongolia,” Miller said. Soyuz Vostok is designed to be the portion of the Power of Siberia 2 pipeline, traversing Mongolia.
But the price of gas supplied via the pipeline – one of the key factors for understanding the cost of building the pipeline and how those costs will be shared amongst the parties involved – will be agreed separately, Miller was quoted by the TASS state news agency as saying.
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