Although Putin described Xi as a “dear friend,” praised Beijing for the successes of the Belt and Road project, and even predicted “great prospects” for bilateral relations, Chinese officials… They didn’t sign The contract provides for additional supplies of Russian gas and the construction of the “Power of Siberia-2” gas pipeline.
Project that The Kremlin has been pushing this for more than seven years, was to be the subject of negotiations. This was announced by presidential spokesman Dmitry Peskov during the first day of Putin’s visit to Beijing.
The talks did not reach anything
Although Vladimir Putin was accompanied by an impressive delegation during his meeting with Chinese officials (including Deputy Prime Minister Alexander Novak, who oversees the energy sector, Gazprom Chairman Alexei Miller, and Rosneft Chairman Igor Sechin), he failed to win the support of Xi Jinping. .
In the spring, when Xi Jinping visited Moscow, Putin confirmed a new gas pipeline project with a capacity of 50 billion cubic meters. Annually “pretty much ready.” He also promised China up to 100 billion cubic metres. Russian gas annually – Five times more than Gazprom is currently pumping. However, during his latest press statement, Xi did not comment on Russian gas. The joint statement of the leaders mentioned only the following: Closer cooperation in the field of energy.
The predicament of the former giant
The Chinese contract is urgently needed by Gazprom, which has lost the ability to operate in the European market. Exports fell to their lowest level since the last years of the Soviet Union, and Gazprom was also forced to make record cuts in production – by nearly a third.
Over a 12-month period from July 2022 to the end of June 2023, the company recorded A net loss of more than one trillion rubles (PLN 43 billion, exchange rate as of October 18) and spent two-thirds of its cash reserves to cover losses and cash gaps.
This year, China will buy 22 billion cubic meters. Gas from Russia via the Power of Siberia-1 gas pipeline, which was launched in 2019. However, the deal will only offset one-eighth of previous exports to Europe, which at their peak 170-180 billion cubic metres. annually.
Even Chinese investment will not be enough
According to the content of the documents of the budget of the Russian Federation for 2024, the price of gas offered to China is approx Two times lower than the rates for the European Union and Turkey. Its price is about $272. (about PLN 1,150) per thousand M six. Compared to about 482 USD (more than 2000 PLN). But despite the cuts and Moscow’s willingness, China is able to refrain from concluding major new contracts, asserts Alexander Gabuev, head of the Carnegie Center for Russia and Eurasia Studies in Berlin. – Any perspective that contracts with China provide new sources of income for Putin’s military coffers is bad for China.
Meeting of the Russian delegation with Chinese officials October 18, 2023.
finally, After bargaining for a “very good price”China may approve the Power of Siberia-2 project, Mikhail Krutikhin, partner at the consulting firm RusEnergy, does not rule out. However, the construction and launch of the gas pipeline will take at least 10 years, and even then It will not replace lost supplies to Europe, The expert adds.
But Russia has little choice, even though its dependence on China is increasing, says Philip Ivanov, a senior fellow at the Asia Society in New York. Despite all the strategic partnership announcements… Chinese investments in Russia remain disproportionately modest: — Chinese companies fear political risks, secondary sanctions, corruption and the general unpredictability of the Russian market, says the expert.
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