A massive new gas pipeline to China could help reduce Russia's reliance on European buyers, but analysts say the project reveals a growing imbalance between the longtime strategic allies.
Beijing emerged as an economic lifeline for Moscow last
year, especially through energy purchases, after Western sanctions over
Russia's invasion of Ukraine cut off crucial trade links.
Moscow is confident that the new pipeline -- Power of Siberia
2 -- is going ahead, but Beijing has so far avoided an explicit commitment.
Analysts say the lagging response shows an imbalance
favouring Beijing in energy deals between the two countries -- as well as
China's wariness of over-reliance on Russia for fuel.
China is "in no rush to sign anything unless the
proposal is favourable and is shaped on China's terms," researcher Maria
Shagina at the International Institute for Strategic Studies (IISS) in Berlin
told AFP.
The project was discussed during Chinese President Xi
Jinping's summit with Russian leader Vladimir Putin in Moscow this week.
Putin said after talks with Xi that "all agreements
have been reached" on the Power of Siberia 2 project.
But their joint statement only said the two sides will work
on pushing forward "research and consultation" on the pipeline.
The Chinese foreign ministry did not respond to a request
for more details.
Power of Siberia 2 could facilitate the transport of 50
billion cubic metres of gas to China annually, roughly on par with the total
capacity of the controversial Nord Stream 2 pipeline from Russia to Germany.
A senior Russian official suggested last year that it could
strategically replace Nord Stream 2.
'Russia is desperate'
Previously the world's largest exporter of liquefied natural
gas (LNG), Russia's gas exports plummeted in 2022 after a flurry of Western
sanctions over the Ukraine war.
As Europe looked for other suppliers, Moscow turned to
alternative buyers including China, with which it is already linked by the
first Power of Siberia pipeline.
In 2022, China overtook Germany to become the top buyer of
Russian energy. It has paid a total of $12.2 billion for coal, gas and oil from
Russia so far this year, according to the Helsinki-based Centre for Research on
Energy and Clean Air.
Russian gas deliveries to China through the existing Power
of Siberia pipeline reached a record 15.5 billion cubic metres last year.
But sales to Asia pale in comparison with the 155 billion
cubic metres of gas Russia exported to Europe prior to the Ukraine war.
"Russia is desperate to send as much gas as possible
eastwards as Europe strives to reduce its dependence on Russian gas," said
Philip Andrews-Speed, a senior research fellow at the National University of
Singapore's Energy Studies Institute.
And a potential Power of Siberia 2 gas deal would
consolidate China as a long-term market, said Jaime Concha, a gas market expert
at industry analysis firm Energy Intelligence.
Russia's existing pipeline infrastructure "was mostly
structured to cater to the European market", Concha told AFP.
Building up an equivalent network in Asia would be costly
and time-consuming, he said, "which shows how few alternatives Russia
has".
'Lessons from Europe'
China, meanwhile, has sought to ensure a diverse set of
energy suppliers.
It has signed a flurry of long-term gas deals around the
world in recent years, including a $60 billion, 27-year agreement with Qatar in
November.
"Chinese policymakers also observe the lessons from
Europe of overreliance on Russian energy imports," said Yan Qin, lead
carbon analyst at Refinitiv.
With a strengthened position in energy negotiations with
Russia, "China emerged as the winner from the war in Ukraine", IISS
researcher Shagina told AFP.
"Beijing capitalised on Moscow's international
isolation and ramped up its purchases of heavily discounted Russian oil, gas,
and coal."
At the same time, China has felt the bite from the turmoil
in global energy markets.
The war in Ukraine has pushed thermal coal prices at China's
Qinhuangdao port "almost as high as Europe", Qin said, while rising
LNG prices have hit gas power plants and industrial users.
Ultimately, she said, the Power of Siberia 2 pipeline could
"enhance China's gas imports capacity greatly and potentially reduce
China's LNG imports demand".
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