As the winter season hits, Europe is facing a natural gas shortage. With the decrease in the rate of gas imported from Russia, high increases in prices draw attention. However, the decrease in Russian supplies may continue because Moscow plans to build a new gas pipeline to China.
This could give Russia the opportunity to market the gas at a higher price.
Russia is sending natural gas to China from the frozen, vast expanses of Siberia.
The pipeline “Power of Siberia 1” was opened in 2019. The aim is to provide support to the Chinese economy from the natural gas fields in Russia’s far eastern regions.
Natural gas expert Tom Marzec-Manser said, “The Power of Siberia 1 uses gas that is unrelated to areas that will supply gas to European markets. So at least right now, gas going from Russia to China doesn’t mean the loss of gas that can go to Europe,” he says.
But that may change soon. Moscow and Beijing are close to agreeing on a second pipeline: “Power of Siberia 2”. This will double gas exports from Russia to China. It will pass through Mongolia and reach the energy-hungry industrial areas near Beijing.
This means that there will also be gas flows to China from fields on Russia’s Yamal peninsula that supply Europe.
According to Manser, this, as the main exporter, allows Gazprom to divert its product from one market to another.
This could give Russia a significant advantage.
Filip Medunic, of the European Council on Foreign Relations, said: “Technically it’s hard to say that the pricing will be at the highest value, but I think Russia is moving in that direction. “They want to turn that to their advantage, at least in the coming years.”
Russia has deployed more than 100,000 troops on the Ukrainian border. The West threatens Russia with sanctions if it invades Ukraine. Experts say that this situation pushes Russia to find new natural gas customers.
“The projection of the European Union is that natural gas consumption will decrease from the mid-term to the long-term, within the framework of reducing carbon fuel consumption,” Manser says.
Experts also state that it will not be easy for Moscow to find direction in a new Chinese market.
Medunic said, “China is known as a country that uses its political, economic and military power and is a difficult negotiating neighbor. Also, China sees itself as a big partner and Russia as a small partner,” he says.
It is stated that the agreement on the Power of Siberia 2 could be signed during the Beijing Olympics next month. However, there is no official statement on the matter yet.