Challenges and Implications of the Delay in Russia’s Gas Pipeline to China

The “Financial Times” reported on Sunday that the Prime Minister of Mongolia, Lkhagvasuren Enkhbayar, said that the construction of the new pipeline (Power of Siberia-2) that Russia plans to extend to China to transport gas may be delayed after it was expected to start operating this year.

Russia is in talks to extend the new pipeline to transport 50 billion cubic meters of gas annually from northern Russia to China through Mongolia, approximately equivalent to the capacity of the Nord Stream 1 pipeline that runs under the Baltic Sea and is currently out of operation since it was damaged in 2022.

Enkhbayar told the newspaper, “China and Russia have not yet agreed on key details of the giant project,” adding that unprecedented global gas prices in the past two years have complicated the negotiations.

The Russian company Gazprom, which will operate the new pipeline, said: “It aims to start gas deliveries through the pipeline by 2030. However, agreement on key points including pricing is still far off.”

Enkhbayar told the “Financial Times”, “Both sides still need more time for detailed research and economic studies… The Chinese and Russian sides are still calculating and assessing the economic benefits.”

Russia has increased its supplies to China to compensate for the loss of most of its gas sales to Europe since the war in Ukraine nearly two years ago, which led Western countries to impose sanctions on Moscow and reduce their reliance on Russian energy.

Victoria Abramchenko, Deputy Prime Minister of Russia, said to TASS news agency last year, “The construction of the part of the Russian gas pipeline that passes through Mongolia to China may begin in the first or second quarter of 2024.” (Reuters)