The hidden problem of the Power of Siberia 2 is demand, not price

Alexey Belogoryev, Research and Development Director of the Institute for Energy and Finance, commented to the Neft and Capital internet portal on the prospects for the Power of Siberia 2 project.

Alexey Belogoryev confirmed the thesis that the Power of Siberia 2 construction will take at least five years. But the commissioning at full capacity may occur earlier than the Western press writes.

"At some point, the Power of Siberia had difficulties with the schedule due to difficulties in increasing gas production for this project. But the Power of Siberia 2 has no problems with the resource base, because existing fields will be used. Relatively speaking, if construction begins in 2026 and the pipeline is launched in 2031, then by 2033 it will be possible to fill the pipeline by 100%. Of course, so far this is just speculation. But the problem is different. China is not ready to guarantee today that by this time it will have additional demand for exactly 50 billion cubic meters of gas per year," the expert says.

"This is a serious challenge for Gazprom, as the scale of the new pipeline construction is quite large, and the payback for such a project will largely depend on the volume of pumping through the pipeline. At the same time, China itself cannot objectively say exactly how much gas it will need by the gas pipeline launch date. Yes, China is a fast—growing market, and gas demand will not peak in 2035, but the growth rate of demand for natural gas is unknown to anyone," Alexey Belogoryev notes.

In his opinion, China has ambitious plans for low-carbon energy, where, of course, there is a place for gas, but renewable energy projects are also actively developing. More importantly, the share of LNG in China's total blue fuel consumption. Beijing, which has built a large number of huge LNG terminals, needs to pay for them somehow. The Power of Siberia 2 is, for the most part, a serious competitor to the purchase of liquefied natural gas for China. Beijing would not have paid attention to the next gas pipeline project from Russia at all if it were not for the risks of LNG supplies, which have increased significantly in the face of confrontation with the United States, the analyst believes.