Hoping for gas export – mega pipeline to China? Xi lets Putin collide

Since Russia hardly supplies gas to Europe anymore, the state-owned company needs new markets. The main major customer is China. Therefore, during the state visit of Chinese President Xi Jinping in Moscow, according to ntv.de, Russian ruler Vladimir Putin aggressively promoted two new gas routes to China: “Far East” and “Power Siberia 2”. He presented Gazprom as a “reliable supplier” who “fulfilled the wishes of the Chinese partners and even made extra deliveries”.

“Company of the Century”
The “Power of Siberia” already exists, the construction of which began in 2014, when Russia was looking for new gas customers due to the annexation of Crimea and subsequent sanctions. It was recently completed and last year more than 15 billion cubic meters of natural gas flowed through the pipeline from Russia to China. From 2026, the Far East pipeline will send gas from the rich deposits of Sakhalin Island through the Sea of ​​Japan, which will then arrive at Vladivostok in China’s far northeast. Putin called this 55 billion euro project the “company of the century”.

Much more important and expensive is the “Power of Siberia 2”: after its planned completion in 2030, the tube will be 2,600 kilometers long and will have cost almost 100 billion euros to build. It will then transport 50 billion cubic meters of gas per year from Western Siberia via Mongolia to China. This would reach the delivery volume of the Nord Stream pipelines – and more than double the Russian-Chinese capacity.

During Xi’s visit, Putin had repeatedly mentioned these ambitious projects, apparently hoping for a final deal. It is not yet clear who will contribute to the construction costs and to what extent. The Russian media even reported, citing Putin, that the deal was sealed. Apparently prematurely, the Chinese state media made no mention of the pipeline after Xi’s visit.

Putin needs good news
German sinologist Helwig Schmidt-Glintzer sees Beijing’s silence as a negotiating tactic, he told ntv.de. Xi Jinping probably wants to keep a certain distance and not appear too pro-Russia in the eyes of the West. Putin’s attitude is also plausible for the sinologist: “He needs good news,” says Schmidt-Glintzer. “Putin also wants to document that he is on good terms with China, because there is also a certain skepticism about the People’s Republic in Russia. And he’s aggressively selling those plans to make it clear that he controls the web that holds Russia together.”

A stable regime in Russia is also important for China, as it has no interest in a coup d’état in Moscow, which could then move closer to the European Union. For a stable rule, Putin also needs secure sources of income, namely gas exports. Nearly half of Russia’s state revenue still comes from the sale of oil and gas. Beijing knows that too. Therefore, it keeps a low profile about the pipeline project, but does not deny it either.

China has many irons in the fire
Nevertheless, the Chinese government is in a much better position in the negotiations. You may not need the pipeline at all. Because Chinese companies have signed more long-term supply contracts than anyone else in the world, the analytics firm BloombergNEF reports. Partners include Qatar and the former Soviet Republic of Turkmenistan.

Therefore, Chinese companies are unlikely to have much need for Russian gas, energy and geopolitical expert Maria Pasthukova, told ntv. “In addition, Russia offers little investment security for such large and long-term projects. Especially under this sanctions regime, Chinese companies are probably not willing to pump in money,” says the expert.

So Russia could have made a huge miscalculation with its gas pipelines. President Xi is unlikely to bury the project entirely, but could push the price up.