Putin once again failed to convince Xi Jinping to build a new gas pipeline from Russia to China

Putin failed again to convince Xi Jinping to build a new gas pipeline from Russia to China

Negotiations on the new pipeline, which has a capacity of 50 billion cubic meters per year and was renamed "Power of Baikal" by Putin, have stalled, the South China Morning Post reported, citing sources familiar with the situation.

"There is no movement on the price," said one of the newspaper's interlocutors.

China wants to receive Russian gas at the price paid by the country's population, which is around $50 per thousand cubic meters, or at least at the Russian domestic price set for industrial consumers — around $120-130.

But Russia's expectations are different, says the SCMP source: it proposes to base the pricing on the price Beijing pays for "Power of Siberia - 1" gas. This price is $250-260 per thousand cubic meters, and it already includes a discount of about 40 percent compared to contract prices for Gazprom's other customers in the far abroad ($420 per thousand cubic meters).

Russian Presidential Aide Yuri Ushakov said on the eve of the SCO summit that Xi and Putin would again discuss this arduous project, the first memorandum of which was signed in 2006. However, the official communique following the meeting does not contain a single word about the gas project, SCMP notes.

Russian Energy Minister Sergey Tsivilev, who accompanied Putin on his trip to Bishkek, said after the talks that the project was "in the final stage of moving to construction." According to calculations by "Vektor Kapital" analysts, the Russian government has made such statements at least 10 times since the beginning of 2022.

In particular, in September 2022, Putin claimed that the main parameters of the gas pipeline agreement, including price terms, had been agreed upon. And in March 2023, Alexander Novak, who headed the Ministry of Energy at the time, announced that the contract would be signed "by the end of the year." Since then, Novak has said four more times that the deal is "in the final stage" and will be signed soon.

There is no reason for China to rush to make a decision on the construction of "Power of Siberia - 2", as its negotiating position is "growing stronger by the day." Gazprom is de facto unable to sell elsewhere the gas that was previously supplied to Europe at up to 200 billion cubic meters per year. Currently, the company's exports are around 70-80 billion cubic meters per year, which is the lowest figure for Russia since the mid-1980s. In Europe, Hungary, Slovakia, and Greece continue to buy Gazprom's gas, but due to the European Union's gas embargo, these flows may also stop in 2027.