The dances between Russia and China on the Power of Siberia 2 gas pipeline
What's happening between Russia and China on the new Power of Siberia 2 pipeline according to the South China Morning Post
The project to build the now famous new Power of Siberia 2 gas pipeline between Russia and China should enter the operational phase in the first months of 2024. But Beijing is resisting in what an in-depth report by the South China Morning Post frames as a negotiating tactic aimed at obtain further discounts on the price of energy and perhaps even exemption from the costs of carrying out a work considered indispensable with a view to diversification of sources.
Beijing is stalling.
The project relating to the construction of the Power on Siberia 2 gas pipeline which should connect Russia and China is slowing down. Beijing is in fact stalling with the aim of convincing Moscow, which desperately needs to find new outlets for its energy, to grant further discounts on the price and construction costs of the work, which the Chinese would like to be borne entirely by the partner.
Necessary work for both.
If completed, the pipeline would transfer 50 billion cubic meters of natural gas per year to China previously destined for Europe, allowing Russia to raise cash and also China to obtain the desired energy security.
The construction of that gas pipeline is necessary for Russia to keep the solemn promise made by Putin to allocate a total flow of over 100 billion cubic meters of gas per year to the Chinese market and to integrate the supply of the existing Power on Siberia 1 pipeline through which 67 billion cubic meters pass every year.
Negotiation tactics.
As a source from the South China Morning Post explains, Beijing is now aiming to extract concessions from Russia. And, according to the same source, the tsar would be subjected to "enormous pressure" to build a pipeline without which "an immense quantity of gas" would be wasted, causing Moscow to lose huge sums.
“As far as construction is concerned – adds the source – (Beijing) wants to be sure that it does not have to bear either the risks or the costs. Russia is the party that will have to pay the entire bill.”
Disappointment for Putin.
As the South China Morning Post observes, China's current prudence is well revealed by what happened at the Belt and Road Forum held last October in Beijing, where the Russian president appeared hopeful of being able to close the agreement on the construction of the gas pipeline However, he found himself forced to return home empty-handed.
Mongolian slap.
The Russian desire to proceed with the project is demonstrated by the recent visit to the Mongolian capital Ulaanbaatar, where the gas pipeline should pass, by Deputy Prime Minister Viktoria Abramchenko, who declared that the feasibility studies have been completed, estimating that the actual works could begin as early as the first quarter of 2024.
But a former member of Mongolia's National Security Council told the South China Morning Post that the country does not consider the project a priority and could delay its execution. “We haven't even talked about prices, tariffs, taxes etc. We can therefore calmly conclude that nothing will happen in 2024 regarding construction.
Further disappointment was reserved for Putin by Mongolian president Ukhnaa Khurelsukh who, met on the sidelines of the Belt and Road Forum, did not provide him with any direct feedback on his willingness to continue the project.
Beijing's objectives.
However, it will be Beijing that will have the final say on an infrastructure that meets the government's objective of diversifying sources and satisfying an internal demand that rose in 2023 to a level between 5.5 and 7%, reaching, according to the data from the National Energy Administration, the record quantity of 390 billion cubic meters per year.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/energia/i-balletti-fra-russia-e-cina-sul-gasdotto-power-of-siberia-2/ on Sun, 03 Dec 2023 08:32:03 +0000.