Russia’s New Gas Pipeline to China Reportedly Falls Through

The planned pipeline intended to transport gas from Russia to northeastern China known as Power of Siberia-2 has likely fallen through.

As the South China Morning Post (SCMP) reported on Monday, Aug 19, Mongolia, whose territory the pipeline would transit through, did not include the project in its national development plans through 2028.

The SCMP said the pipeline could provide Mongolia with transit revenue and 50 billion cubic meters of gas annually, but former Mongolian Security Council member Munkhnaar Bayarlkhaag said Moscow has failed to reach an agreement with Beijing.

“We are entering a long pause, where Moscow no longer believes it can get the deal it wishes from Beijing and will probably park the project until better times,” he said.

Bayarlkhaag added that Beijing might’ve been displeased with Russian state-owned energy conglomerate Gazprom’s potentially obtaining unilateral control over the Mongolian section of the pipeline.

“This would have meant a sudden and long-term increase in Moscow’s influence in Mongolia, to the detriment of Beijing,” he said. “Though never explicitly verbalized, it would have been ‘fair’ to include the Chinese into the Mongolian section’s development from the beginning.”

On June 2, the Financial Times (FT) reported that China and Russia did not conclude a deal on the pipeline because China demanded to receive it at Russia’s subsidized domestic prices and that it would only purchase a small fraction of the pipeline’s planned annual capacity.

Other Topics of Interest

Will They Deserve to Even be Called “Negotiations”?

Just because two opposing parties arrive at a table does not mean that the ensuing events will necessarily qualify as “negotiations.”

In May, it was reported that Gazprom posted its biggest losses for a quarter of a century after gas sales more than halved and its European markets were lost due to the war in Ukraine.

In 2023, Gazprom posted a loss of 629 billion rubles (almost $7 billion) with a drop in revenue from pre-war levels of almost 30 percent and gas sales being more than halved, according to the FT.

According to The Moscow Times, Gazprom’s debt reached a record 6.65 trillion rubles ($73.2 billion) which is greater than Russia’s 5 trillion rubles ($55 billion) National Welfare Fund.