HomeMediaMedia PublicationsAnalyticsHow Big Politics saves Gazprom and the Power of Siberia 2

How Big Politics saves Gazprom and the Power of Siberia 2

14 May 2025

Gromov Alexey I. Principal Director on Energy Studies, Head of the Energy Department
Тип: Analytics

Alexey Gromov, Principal Director on Energy studies at the Institute for Energy and Finance, gave a detailed interview to the Novye Izvestia newspaper about the prospects for reaching commercial agreements between Russia and China on the new Power of Siberia-2 gas pipeline project implementation.

— Due to US President Trump's trade wars, China increased its pipeline gas imports in February, exceeding imports LNG. This is the first time such an imbalance has been recorded.

— It is a fact that China has been actively increasing purchases of pipeline gas in recent months, primarily through the Russian Power of Siberia 1 project. And since February, against the background of the aggravation of relations with the United States, China has completely stopped purchasing American LNG.

It is quite obvious to me that China will not return to full-fledged purchases of American energy resources for its needs, with the exception of those purchases that have already been fixed in long-term contracts between China and American manufacturers.

— Why can we say this with confidence? This is not the first time China has entered into a confrontation with the US administration. And even political scientists are already dizzy from Trump's contradictory and numerous statements.

— Because this trade war has once again shown Beijing how volatile their main trading partner, the United States, can be. And in this context, of course, Russia has an additional opportunity to increase its energy supplies to China. First of all, it concerns natural gas.

— So, China has a choice to exchange "awl for soap": to weaken dependence on America and increase dependence on Russia?

— Beijing rightly believes that an increase in Russian pipeline gas supplies on a long-term basis will link China with Russia for at least several decades. And this is probably the main stumbling block between the parties now, as China is betting on an accelerated transition to low-carbon development of its economy after 2030.

As you know, the Russian side has already prepared a feasibility study for the Power of Siberia -2, that is, the gas pipeline project itself is ready. Only the commercial component is missing, namely, there is no contract for the supply of gas via SS-2 from Russia to China, since the parties have not agreed on the price of gas, as well as on the volume and conditions of its supply.

— Is the main question about the price?

— Not only that. The Russian Federation expects to supply gas via SS-2 in the amount of at least 50 billion cubic meters. These are very significant volumes.

The total volume of Russian pipeline gas supplies to China by 2030 will already reach 48 billion cubic meters. And here, within the framework of only one new project, the Power of Siberia — 2, we propose that China actually double these supplies. And this is a serious challenge for the Chinese economy. China is not yet ready to say that it will be able to take from Russia all the volumes of gas that we offer under this contract.

And here we must either reduce the declared capacity of the pipeline system, which is unlikely, or agree to more flexible "take or pay" supply terms.

The second issue is the price formula for Russian gas.

The Chinese side insists on significant price concessions from Russia, hoping to receive Russian gas through the Power of Siberia 2 at a significantly lower price than is currently the case under the Power of Siberia 1 gas supply contract. And there is probably much less room for compromise here.

Gromov Alexey I. Principal Director on Energy Studies, Head of the Energy Department
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