Russia is reportedly contemplating a delay in the construction of the "Power of Siberia-2" gas pipeline in early 2024. The Economic Times, citing information from Mongolia's leadership, through which the pipeline is slated to pass, revealed that key details of the project are yet to be agreed upon by Russia and China.
Mongolian Prime Minister Oyun-Erdene Luvsannamsrai highlighted the ongoing challenges in the negotiations, attributing the potential delay to the record-high global gas prices witnessed over the past two years.
The South China Morning Post had previously reported in November that China had proposed an independent payment arrangement for the construction of Power of Siberia-2, coupled with demands for new gas discounts. According to the publication, China appears reluctant to invest in a gas pipeline that is positioned to replace Russia's European market share.
The backdrop of these negotiations is critical for Gazprom, Russia's state-owned gas giant. Following Russia's invasion of Ukraine, Gazprom lost a significant portion of its European market and more than half of its exports. Consequently, the company is in desperate need of a new agreement with China to secure its footing in the global gas market.
Russian President Vladimir Putin engaged in diplomatic efforts, meeting with Chinese President Xi Jinping twice in 2023, attempting to garner support for the "Power of Siberia-2" project, which the Kremlin has been advocating for over seven years. Despite these high-level discussions, the negotiations failed to yield concrete results.
The Power of Siberia 2, also referred to as the Altai gas pipeline, is a planned natural gas pipeline that aims to transport natural gas from Russia's Altai region in Western Siberia to the North-Eastern part of China. The pipeline is designed with a diameter of 1,420 millimeters. It is envisioned to have a capacity of delivering 30 bn cubic meters (bcm) of natural gas annually, with the estimated overall project costs reaching up to $14 bn.
Comments (0)