Construction of the Power of Siberia 2 gas pipeline from Russia to China may be delayed

Construction of the new Russian Power of Siberia 2 gas pipeline to China, which is expected to begin this year, may be delayed, Mongolian Prime Minister Luvsannamsrain Oyun-Erdene said. The Financial Times (FT) reported this today. China and Russia still need to agree on key details of the huge project, the head of the Mongolian government explained. Negotiations have been complicated by record high gas prices over the past two years, he said. The parties involved have not yet commented.

Russia is negotiating the construction of a new gas pipeline that would transport 50 billion cubic metres of gas a year from northern Russia to China via Mongolia. That is almost as much as flowed through the now-inoperative Nord Stream 1 pipeline under the Baltic Sea, which was damaged in 2022.

The pipeline will be operated by Gazprom. The company wants to begin gas deliveries in 2030. However, an agreement on key issues, including prices, remains out of reach, Reuters reported.

„Both parties involved need more time for a more detailed analysis,“ the Mongolian prime minister told the FT.

„Both the Chinese and Russian sides are still carrying out calculations and estimates and assessing the economic benefits,“ he added.

Russia is increasing supplies to China to make up for the loss of a large share of its gas sales in Europe. Western countries imposed sanctions on Russia after Moscow's invasion of Ukraine and are reducing their dependence on Russian energy.

Russian Deputy Prime Minister Viktoria Abramchenko told the TASS news agency last year that construction of the Mongolian section of Power of Siberia 2 could begin in the first quarter or first half of 2024.