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As Power of Siberia 2 Pipeline Stagnates, So Do Russia’s Hopes for Pivoting Gas Exports Eastward
As President Vladimir Putin paid a state visit to China in May, his Deputy Prime Minister Alexander Novak said that Moscow and Beijing were soon planning to sign a contract on the construction of the Power of Siberia 2 gas pipeline.
“We plan additionally to finish the review and sign a contract for the construction of a gas pipeline with a capacity of 50 billion cubic meters (bcm) of gas through the territory of Mongolia in the near future,” Reuters quoted Novak as saying.
While some observers expected the deal on Power of Siberia 2 to be signed during Putin’s visit to China, this did not happen. Since then, there have been no public announcements suggesting the contract has moved on.
According to the Financial Times’ sources, the project could be stalled because China asked to pay for gas at prices close to Moscow’s domestic tariffs, something that would undermine any hope for profits for Russia’s gas exporter Gazprom. Moreover, China was prepared to buy only a fraction of the 50 bcm of the pipeline’s capacity, the sources added.
At this point, the project appears unfeasible. But are there any other options left for Gazprom to boost its foreign sales after its main export direction — to Europe — has nearly been severed?
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