Power of Siberia 2: Moscow Pushes While Beijing Fiddles

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Power of Siberia 2: Moscow Pushes While Beijing Fiddles

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Power of siberia pipeline (© Gazprom)
Power of siberia pipeline (© Gazprom)

Russia's gas strategy was long predicated on the continued, uninterrupted flow of gas to Europe through the Yamal and Nord Stream pipelines, the 'big two' of twelve pipelines bringing gas from Russia into the West. Its War of Aggression against Ukraine has turned this strategy on its head, as gas transmission lines have either been destroyed (Nord Stream) or forcing a fundamental rethink of Moscow's geopolitical relationships with the rest of the world while hedging its financial future on China's readiness to purchase the surfeit of gas that would have otherwise gone to Europe.

Power of Siberia 2 - a grand Russian gas pipeline project to transform energy flows across Asia - was seen in the Kremlin as the alternative to politicized markets in Europe.  

As reported in the Financial Times, Power of Siberia 2 was conceived more than a decade ago to help Russia “turn to the east”, the pipeline through Mongolia to China was a way to diversify gas sales, bolster revenues, and give the Kremlin more diplomatic clout.

Russian Prime Minister Mikhail Mishustin was in Beijing this week with the construction launch of Power of Siberia 2 foremost on his mind. Yet China is in no hurry to sign on to any major Russian pipeline project.  According to Alicja Bachulska, a China policy expert at the European Council on Foreign Relations, "Beijing has a history of prolonging negotiations to get a better deal — this was the case when the Power of Siberia 1 was negotiated. As Russia’s aggression against Ukraine has turned into a protracted war, Beijing believes that its bargaining position vis-à-vis Moscow can only get stronger.”

Taking its time may enable China to secure a lower price for gas through the pipeline, Bachulska added.

Though China does stand to gain from the pipeline, it is keen to diversify the country’s energy sources, especially overland supplies from Russia and Central Asia that would be more secure than sea routes in the event of geopolitical or military tensions with the west.

But for the moment, while the Kremlin repeatedly announces its desire to go forward with the Power of Siberia 2, Beijing fiddles. China experts believe little progress will be made on the nascent pipeline until Russia further compromises on the price. More losses fighting its war in Ukraine may hasten this action.

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