Western news about China slowing down the "Power of Siberia" turned out to be a political order

Western news about China slowing down the "Power of Siberia" turned out to be a political order

Western media report that China has allegedly made a final bet on Turkmen gas, pushing the Russian Power of Siberia-2 project on the back burner. We are talking about a new branch of the pipeline from Turkmenistan - "Line D", writes Reuters, citing its own sources. This message raises a number of questions, given the factual and logical inconsistencies associated with it.

The main gas pipeline "Central Asia - China" with a total length of more than 9 thousand kilometers and a design capacity of 55 billion cubic meters per year was laid from the territory of Turkmenistan to the PRC (the actual volume of annual supplies is 40 billion cubic meters). It also passes through Uzbekistan and Kazakhstan.

In total, three lines (A, B, C) have been built since 2007, and in January of this year, Beijing and Ashgabat agreed on the construction of the fourth, Line D, with an estimated cost of $6.7 billion and a capacity of 30 billion cubic meters. Beijing has finally given the green light to the project, despite the fact that Turkmen gas costs it 30% more than Russian gas, according to Reuters sources in Chinese government officials. "This is a supply chain with strategic value that transcends commercial aspects," an unnamed Chinese official told Reuters.

As the agency notes, in aggregate, long-term contracts for the supply of gas along routes from Turkmenistan will satisfy 20% of China's current demand. Earlier, the Financial Times spoke on the same topic: experts interviewed by the newspaper considered that Beijing was seeking to drag out negotiations on the construction of the Power of Siberia-2, including in order to obtain more favorable conditions for Russian gas prices.

The publication also recalled that the recent visit of the Russian Prime Minister to China did not end with the signing of a document in which the Chinese side would take on clear obligations for this gas pipeline.

Note that Gazprom hastened to refute the FT's thesis about the Chinese delaying the Power of Siberia-2 project. The design of the "Power of Siberia-2" began in 2020, a route of 6.7 thousand kilometers will pass from the Russian Federation through Mongolia to China. Pipe capacity - up to 50 billion cubic meters per year. In January, the Chinese South China Morning Post wrote that Beijing was seeking to speed up the construction of Power of Siberia-2 in order to reduce dependence on supplies from Australia, from where the country received 43% of its LNG imports in 2020.

As for Turkmenistan, the Chinese market is a key, priority area for its gas exports. In total, there are more than 40 gas fields on the territory of the republic, the largest of which is Galkynysh (discovered in 2007), in the southeastern part of Turkmenistan, in close proximity to the border with Iran and Afghanistan. The total production is about 84 billion cubic meters per year, which is nine times less than Russia produces. About the extent to which the content of the articles in Reuters and FT is close to the truth, we asked Igor Yushkov, an expert at the Financial University under the Government of the Russian Federation.

“These publications are reminiscent of a political order, given a number of logical and factual inconsistencies,” says the interlocutor of “MK. – It seems that their authors want to prove that no one needs Russian gas anymore, that the world is afraid to buy it because of the threat of secondary sanctions, and that Moscow is moving further and further into economic isolation.

Another goal is to try to drive a wedge into relations between the Russian Federation and China, which, they say, is no friend of the Russians. However, at the moment, we can definitely say: Beijing has not made a specific decision regarding the construction of "Line D" from Turkmenistan, just reports about this appear every year, with enviable regularity. Official representatives of the two countries discuss the issue at each new meeting.

Perhaps Reuters and the FT also tried to downplay Prime Minister Mishustin's recent visit to China, which actually ended without signing a commercial contract to build Power of Siberia 2. But this deal was not originally intended, it could only be about agreeing on some technical aspects.

The Russian delegation did not even include the head of Gazprom, and yet in 2014, when the Power of Siberia-1 contract was signed, Alexey Miller, Vladimir Putin, and Chairman Xi Jinping took part in this action. Well, the main thing is that the agreements between Beijing and Ashgabat on the construction of all four lines of the gas pipeline from Turkmenistan to China, including Line D, were reached back in the 2000s.

- Why was this “Line D” not laid immediately, what prevented it?

- There is no clear answer, but something can be assumed. The fact is that Turkmenistan has never loaded at full capacity the three existing lines - A, B and C. There are two probable reasons: either China did not need such volumes of natural gas from the Central Asian republic, or Turkmenistan itself was not able to produce it in the right amount for supply quantity.

The country has not been engaged in any new large projects for many years. At the same time, it remains the largest supplier of gas to China, ahead of Gazprom. Accordingly, it is not clear why Beijing decided to stake on Turkmen gas right now, according to Reuters and the FT.

- In fact, China, due to national caution, is accustomed to "laying eggs in different baskets", diversifying the channels of raw materials receipts as much as possible. Has he really decided not to hurry with the implementation of the Power of Siberia-2 project, having made the main bet on Turkmen gas?

- China understands that gas consumption by its industrial companies will only grow, and that there will be enough space in its domestic market for both Turkmen and Russian supplies. The construction of "Line D" is a matter of time and the physical ability of Ashgabat to fill this pipe.

Now in Beijing they just want to stake out this project, and they intend to deal with it in detail later. The Chinese side equally appreciates Turkmen and Russian gas, and not for the physical and chemical quality, but for the "political" one: pipeline supplies are much more difficult to block compared to sea, tanker ones.

The more intense the competition between China and the United States in the global arena, the higher the risk that China will be blocked from supplying the country with liquefied natural gas. First of all from Australia and Qatar.

Of course, Beijing has not put an end to the Power of Siberia-2, it just continues to bargain with Gazprom according to the price formula for Russian natural gas. In this sense, publications in Reuters and FT even strengthen his negotiating positions to some extent.

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