Construction of a gas pipeline "Power of Siberia-2" postponed

The construction of the Power of Siberia 2 has been postponed, the Chinese publication The South China Morning Post reports, citing former member of the Mongolian Security Council Munkhnar Bayarlhavg.

The second part of the gas pipeline was supposed to pass through Mongolia. The country planned to build 2.5 thousand kilometers, but the authorities did not include it in the national development plan until 2028.

“We are entering a long pause because Moscow no longer believes it can get the deal it wants from Beijing, and the project is likely to be postponed until better times,” Munkhnar Bayarlhavg said.

Russia has had problems with the construction of the gas pipeline for a long time. Back in 2022, Putin proposed to China to increase purchases of Russian gas to 100 billion cubic meters per year, but the parties could not agree on the price. Beijing demanded to lower the price of gas that will go through the second branch of the Power of Siberia to $60 per thousand cubic meters, that is, almost to the domestic Russian level, which Moscow supports with budget subsidies. Now China buys Russian gas for $260 per thousand cubic meters.

The disagreements on this issue led to Gazprom CEO Alexey Miller not accompanying Putin during his May visit to China. At that time, the topic of “Power of Siberia-2” was one of the key issues in the Russian leader's negotiations with Xi Jinping. In addition, Putin then asked China not to participate in the Ukrainian peace forum and to increase the activity of Chinese banks in Russia.

Russia's gas exports to Europe fell to their lowest level since the 1970s in 2023. After the Nord Stream explosion, it is difficult to redirect Russian gas going to Europe to China. Europe is supplied from Western Siberian fields, while China is supplied from Eastern Siberian fields (via the Power of Siberia-1 gas pipeline). The goal of Power of Siberia-2 is to send gas to China from Western Siberian fields.

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