China Is Rethinking Its Russian Pipeline Plans

Via Eurasianet.org,

• China appears to be reconsidering the Power of Siberia 2 gas pipeline project with Russia, as indicated by Mongolia's exclusion of funding for the pipeline in its economic plan.

• Turkmenistan is emerging as a favored gas supplier for China, with increased cooperation and higher gas export revenue compared to Russia in 2024.

• Experts suggest that China sees Turkmenistan as a more manageable partner for energy projects, given its political landscape and simpler economy.

Buddies in war, Russia and China appear to be frenemies when it comes to energy. As a result, Turkmenistan may be the primary beneficiary of Beijing’s need for more natural gas.

Just a few months ago, Russian and Chinese officials were saying that an agreement to build a new gas pipeline connecting the two countries, dubbed Power of Siberia 2, was imminent. Now, it appears those plans have been put on hold. A recent decision by Mongolia’s government not to include funding for pipeline construction in a five-year economic plan is widely seen as an indicator that China is rethinking the pipeline project, the South China Morning Post reported. 

Power of Siberia 2 is projected to carry up to 50 billion cubic meters of gas annually from western Siberia to China via Mongolia. Its operation would provide much needed revenue for Russia, which is straining to afford the cost of its war in Ukraine. China has proven an important supporter of Russia, helping the Kremlin surmount sanctions imposed by the West. But the hold put on the Power of Siberia 2 project suggests Beijing’s friendship does have boundaries, despite the famous proclamation by Chinese leader Xi Jinping and his Russian counterpart, Vladimir Putin, that bilateral relations had “no limits.”

While China is keeping Russia hanging on energy cooperation, it is tightening ties with Turkmenistan. A cohort of Turkmen students, for example, has spent the summer taking a training course at Petroleum University in Beijing, the Turkmenportal website reported. 

RFE/RL cited a regional expert, Alexey Chigadayev, as saying a new pipeline connecting China and Turkmenistan makes more sense for Beijing. For one, China would maintain a far greater degree of control over such a pipeline during both the construction and operational phases. “Negotiating with Turkmenistan’s political leadership is also easier – it has an even higher level of authoritarianism than Russia and a simpler economy,” Chigadayev told RFE/RL.

So far in 2024, Turkmenistan is outpacing Russia in supplying gas to China, in terms of revenue. A report published by an Uzbek news outlet, Spot.uz, said that Turkmenistan was China’s top gas supplier during the January-July period, exporting $5.67 billion in gas. Russia was second with $4.69 billion in sales. Kazakhstan also provided over $730 million worth of gas to China during the period.