The construction of a new gas pipeline from Russia to China has been postponed for an unspecified period. The South China Morning Post reports that Mongolia has excluded the Gazprom pipeline from its national development plans until at least 2028. This decision significantly impacts Russian President Vladimir Putin’s initiative to boost gas supplies to China.
The proposed pipeline, which was intended to stretch 2,500 kilometers through Mongolia, aimed to deliver gas from Russia to China. However, Mongolia’s decision not to include this project in its development plans has put the project on hold.
Moscow had initially offered Mongolia the opportunity to benefit from both gas transit revenues and access to a pipeline designed to carry 50 billion cubic meters of gas per year. Despite this offer, Russia has struggled to secure an agreement with China, the primary consumer of the gas.
In 2022, Putin proposed to Chinese President Xi Jinping an increase in gas purchases to 100 billion cubic meters annually. This move was aimed at compensating for the loss of European markets for Gazprom. However, despite discussions about a “strategic partnership” and Putin’s visits to Beijing, Xi has not approved the construction of the pipeline.
The Financial Times reports that a major factor in the delay is China’s demand for a substantial reduction in gas prices. China is seeking a price of approximately $60 per thousand cubic meters, which is four times lower than the current rate of $260 per thousand cubic meters charged through the existing Power of Siberia-1 pipeline. This price discrepancy has contributed to the suspension of the pipeline project.
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