The construction of the Power of Siberia 2 natural gas pipeline, a significant project for Russia’s overseas financial stability, is expected to face delays as China employs strategic negotiation tactics, as reported by a Russian source and Chinese analysts.
Discussions with Beijing regarding the pipeline’s construction, crucial for diverting 50 billion cubic meters of natural gas annually from Europe to north China, have progressed slowly. This move would significantly enhance Beijing’s energy security.
To fulfill Russian President Vladimir Putin’s commitment to export at least 98 billion cubic meters of gas to China, the new pipeline, Power of Siberia 2, is deemed necessary as Power of Siberia 1 has a limit of 67 billion cubic meters annually, according to figures from BBVA.
Insiders suggest that China is leveraging its bargaining power effectively, aiming for more favorable terms and deep discounts. The unnamed Russian source highlighted China’s strong bargaining stance, understanding its robust position in the negotiation process.
Pressure is mounting on Putin to ensure the pipeline’s construction to avoid potential gas wastage and financial losses for Russia. The source indicated that China aims to minimize risks and costs, with Russia bearing the entire financial burden.
Despite the challenges, the proposed pipeline, if constructed, would test the limits of the strategic partnership between Beijing and Moscow. This comes at a time when Russia faces unprecedented sanctions from Western countries due to the Ukraine invasion, impacting Russian natural gas supplies to Europe.
Analysts, including Li Lifan from the Shanghai Academy of Social Sciences, acknowledge that the proposed pipeline would be advantageous for Russia due to its shorter route and lower construction costs. However, they note China’s cautious approach, emphasizing the project’s infrequent mention in official documents and media.
Speculation arose about a potential deal during the Belt and Road Forum in mid-October, but no agreement materialized. The construction timeline for Power of Siberia 2, estimated at six years, faces uncertainties as negotiations continue.
While Chinese officials have downplayed discussions around Power of Siberia 2, the project’s progress aligns with Beijing’s strategy for diversifying gas imports. Despite geopolitical challenges, China’s increasing winter gas consumption reinforces its reliance on diverse energy sources, including imports from Australia, Qatar, Central Asia, and Russia.