Massive New Russian Natural Gas Pipeline To China Faces Delays

By Tsvetana Paraskova of OilPrice.com

Russia and China are still at odds over the costs and delivery prices of a new major Russian natural gas pipeline to China, which could lead to delays in construction, according to the prime minister of Mongolia, which is planned to host a section of the infrastructure.  

“The Chinese and Russian sides are still doing the calculations and estimations and they are working on the economic benefits,” Mongolia’s Prime Minister Luvsannamsrai Oyun-Erdene told the Financial Times in an interview published this weekend.  

“Those two sides still need more time to do more detailed research on the economic studies,” the Mongolian official told FT.

The delay in the agreements suggests that Russia would have to wait more years than originally anticipated in order to have a larger gas pipeline outlet in China that could partly replace the gas volumes it has lost on the European market.   

Currently, Russia supplies pipeline gas to China via the Power of Siberia pipeline, one of the biggest projects recently completed by Gazprom and the first conduit for Russian gas to China. Now, there’s talk about the Power of Siberia 2, but negotiations between Russia and China haven’t progressed much. An agreement on the Power of Siberia 2 has not been reached yet due to some sticking points, including the prices at which Gazprom will deliver the gas.

The Power of Siberia 2 pipeline was designed to ship gas from Russia’s Western Siberia Altai region to northeast China via Mongolia.

Russia could launch construction of the Mongolia section of the major natural gas pipeline to China as early as in the first quarter of 2024, Russian Deputy Prime Minister Viktoria Abramchenko said at the end of last year.

The design for the Mongolian section of Power of Siberia 2, Soyuz Vostok, is expected to be approved in the first quarter of 2024 and construction could begin then, Deputy Prime Minister Abramchenko said in October 2023, as quoted by Russian news agency TASS.