HomeNewsRussia hopes to seal Power of Siberia 2 deal with China this year

Russia hopes to seal Power of Siberia 2 deal with China this year

3/23/2023

(Reuters) - Russia hopes that a deal to provide gas supplies to China through the planned Power of Siberia 2 pipeline can be reached before the end of the year, Deputy Prime Minister Alexander Novak was quoted as saying on Thursday.

Moscow is eyeing the 2,600 km (1,620 mile) pipeline - which would have a capacity of 50 billion cubic meters (bcm) of gas per year - as a way to replace lost exports to Europe.

President Vladimir Putin discussed the plan with Chinese President Xi Jinping at a Moscow summit this week, and Novak said on Tuesday that instructions had been given to gas company Gazprom to reach a deal as soon as possible.

"Now the contract terms are being finalized between Gazprom and the Chinese company CNPC. A feasibility study is already underway, the design of the gas pipeline route through the territory of Mongolia," TASS quoted Novak as saying on Thursday.

"We hope, we are sure that our companies will come to an agreement by the end of the year and sign the contract."

Russia is in a hurry to clinch the deal but Beijing is well placed to drive a hard bargain on price. Experts say China is not expected to need additional gas supply until after 2030.

Moscow needs the deal more than Beijing, as Gazprom looks to China to make up for the collapse of the European market that used to account for 80% of its exports.

On account of sanctions and last year's unexplained explosions in the Nord Stream pipelines under the Baltic Sea, analysts expect Gazprom to deliver only 50-65 bcm to Europe and Turkey this year, down from a peak of about 200 bcm in 2018.

A first Power of Siberia pipeline is already up and running, and Novak confirmed it would deliver 22 bcm of gas to China this year. It is due to reach full capacity of 38 bcm by 2027.

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