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Power of Siberia 2 pipeline talks stall over China-Russia price dispute: sources

Economy World



China and Russia’s negotiations regarding the construction of the Power of Siberia 2 pipeline have stalled, according to multiple sources who have knowledge of the issue, as both sides cannot bridge a big gap over gas price expectations.
“China hopes to secure a price comparable to Russia’s subsidised residential rate, around US$50/thousand cubic metres, or at least the domestic industrial rate of about US$120-130/thousand cubic metres,” said one source, who asked for anonymity due to the sensitivity of the issue.

But Russia has a different expectation, as it wants to reference the price of the existing Power of Siberia 1 pipeline, which is about US$250-260/thousand cubic metres, the source added.

China’s current average gas import price via Power of Siberia 1 is about US$258/thousand cubic metres, the source noted, while Russia’s selling price to Europe before the Ukraine war was over US$420/thousand cubic metres.

“It seems to me that Gazprom and CNPC (China National Petroleum Corporation) are preparing to begin supplying Russian gas to China via the Far East route and are discussing projects to expand and increase supplies along this route,” said a second source, who also asked to remain anonymous.

“The same is happening with the Power of Siberia 1 – we see that they are also working to increase physical supplies.”

The planned 2,600km (1,553 miles) Power of Siberia 2 pipeline is expected to carry 50 billion cubic metres of gas per year ‌to ⁠China via Mongolia from the Arctic gas fields of Yamal, which is also assumed to serve as a complement to Power of Siberia 1 or the China-Russia Far East Gas Pipeline.