As a result of Western sanctions, Russian gas exports to Europe have declined sharply, prompting Gazprom to develop a new pipeline called “Power of Siberia 2” to redirect gas supplies to the Chinese energy grid. This project, which is expected to cost billions of euros, will span almost 2,800 kilometers and transport around 50 billion cubic meters of gas annually. The aim is to provide an economic boost to Gazprom Group.
Due to the decline in European gas exports since the invasion of Ukraine, Russia has shifted its focus towards securing deals with China. Negotiations for the pipeline project are progressing, but China is reportedly pushing for lower gas import prices. According to Russian insiders, China threatened to scrap the deal if gas prices were not aligned with domestic rates. China aims to only purchase a portion of the available gas initially and increase it as demand grows. The bargaining power seems to be tilting in China’s favor due to Russia’s limited alternatives for gas exports.
Chinese negotiating tactics are putting pressure on Russia, highlighting China’s growing influence in the relationship. While Russia urgently needs funds amid the war economy, China seems to be in a position to negotiate for better terms. The failure to reach an agreement yet indicates the dominance of China in these discussions and the inevitability of Russia conceding to Chinese demands. The relationship between Russia and China has been strained during negotiations as evident in Gazprom CEO Alexey Miller’s absence from a significant visit by Vladimir Putin to Beijing in May where critical talks occurred.
The pipeline deal with China remains a critical issue for Russia as it faces challenges without it, including continued financial losses. The negotiation stalemate underscores China’s ability to dictate terms and Russia’s need to comply if they want secure the deal. With no viable alternatives and growing energy demands in China, Russia finds itself in a vulnerable position emphasizing the monopoly that China holds in this strategic partnership.
In conclusion, while Russia needs funding amidst its war economy; it’s facing tough negotiations with an increasingly powerful partner like China who is pushing for better terms or threaten
