Moscow and Beijing are still assessing the cost and benefits of Power of Siberia 2, which would pass through Mongolia
© Gazprom
The construction of the Power of Siberia 2 gas pipeline linking Russia to China via Mongolia is expected to be postponed, the Financial Times has reported, citing Mongolian Prime Minister Luvsannamsrain Oyun-Erdene.
Earlier this week, Russian Deputy Prime Minister Aleksandr Novak said the timing and cost of building the mega pipeline, which would deliver Russian natural gas to China, will be determined after Moscow and Beijing sign binding agreements.
Gazprom, which will operate Power of Siberia 2, has said it aims to begin gas deliveries by 2030.
The two sides need more time to conduct economic studies on the project, according to Oyun-Erdene, who previously said construction of the 3,550-kilometre long pipeline would start in 2024.
“The Chinese and Russian sides are still doing the calculations and estimations and they are working on the economic benefits,” he told the media outlet, adding that record global gas prices during the past two years have complicated the talks.
The PM added that Mongolia was willing to start construction work once Russia and China are ready.
Moscow is likely to be seeking better financial terms from its Eastern partner than it achieved in the Power of Siberia 1 contract, signed in 2014 when global gas prices were much lower, according to Sergey Vakulenko, a former strategy director for Gazprom Neft and a senior fellow at the Carnegie Endowment for International Peace, as cited by FT.
The analyst said Chinese government payment data shows that Russia is paid significantly less than Turkmenistan or Uzbekistan, which also sell natural gas to China.
Russia has dramatically increased its fuel supplies to China, which is now ranked as the world’s second-largest oil consumer, since the EU slashed imports from Russia as part of Ukraine-related sanctions.
Power of Siberia 2, if completed, will deliver natural gas from Russia’s Yamal peninsula, which – prior to the Ukraine conflict – used to serve the EU market through several pipelines, including Nord Stream, which was sabotaged in September 2022.
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