Xi Shoots Down Putin's Pipeline Plan
Published May 20, 2024 at 8:30 AM EDTUpdated May 20, 2024 at 2:05 PM EDT
By Micah McCartney
China News Reporter
Russian President Vladimir Putin's trip to China apparently failed last week to secure a project key to the hopes of Moscow's struggling energy sector.
Putin's state visit produced a joint statement heralding a "new era" for Beijing and Moscow's " no limits partnership," while the hug shared with Chinese counterpart Xi made headlines. But the long-ruling Russian leader walked away without a contract for a pipeline between his country and its largest export market.
Russia has offset some of the business it lost over its February 2022 invasion of Ukraine by rerouting natural gas and oil to China. This relationship continues to deepen with the first Power of Siberia pipeline expected to reach full capacity this year and pipe 38 billion cubic meters (bcm) into China annually.
However, the outsized importance of the Chinese market gives Beijing more control over the terms. G as is flowing into China at a rate of $257 per 1,000 cubic meters, compared to the $320 for its remaining European markets, and this discount is set to increase to 28 percent next year.
During Xi's visit to Moscow last March, Putin reportedly said the planned Power of Siberia-2 was in a "high degree of readiness" and proposed increasing annual gas flows into China to 100 bcms. Putin failed to get a green light then and during his stay in China last October at the Belt and Road Initiative summit.
Russian President Vladimir Putin on May 17, 2024, in Harbin, China. Putin has yet to secure a green light for the Power of Siberia 2 gas pipeline, with observers saying China is waiting for Moscow... More GETTY IMAGES
Putin and Xi's joint statement released after their most recent talks mentioned only a vaguely worded commitment to deepen "cooperation in the field of oil, natural gas, liquefied petroleum natural gas, coal and electricity;" facilitate "unimpeded transportation of energy resources;" and promote "major joint energy projects."
The statement also characterized Sino-Russian ties as a "model" for international relations, contrasting this with the "bloc confrontation" and "hegemony" of the U.S.-led order.
"China and Russia are natural partners with a strong vitality and broad prospects for cooperation. The Power of Siberia-2 is crucial for deepening energy cooperation between China and Russia," Liu Pengyu, a spokesperson for the Chinese Embassy in the U.S., told Newsweek.
"Both sides are actively discussing a range of issues, including project technology, business, and cooperation models," he added.
Newsweek has reached out to the Russian Foreign Ministry via email request for comment.
Putin's visit came just two weeks after Russian state-run gas giant Gazprom Group reported losing money last year for the first time in more than two decades, adding to the pressure to make Power of Siberia-2 happen.
The pipeline is expected to reroute 50 bcm (1.8 trillion cubic feet) of natural gas annually to northern China, a capacity comparable to the 55 bcm the Nord Stream pipelines pumped to Germany before being sabotaged in 2022.
The South China Morning Post previously cited sources familiar with the matter as saying Beijing is holding out for a scenario in which Russia bankrolls the project in its entirety.
"China has been very quiet on the subject, but we know that they are receptive to the project, provided they get a good pricing deal," Macro-Advisory CEO Chris Weafer told Newsweek earlier in May.
Xi Shoots Down Putin's Pipeline Plan (newsweek.com) |
