Russia does not mind negotiating with Europe to extend gas exports after 2024 (Shutterstock)

Mongolian Prime Minister Luvsan Namsray Uyun-Erden expects construction of the Kremlin's long-planned mega pipeline linking Russia's western gas fields with China to be delayed, in a blow to Moscow's plans to secure a new market for gas it previously sold to Europe, he was quoted as saying. British newspaper "Financial Times".

The so-called Power of Siberia 2 pipeline - which will cross Mongolian territory - has been a priority for Moscow for more than a decade, but has gained greater importance since Europe reduced its imports of Russian gas in response to the Russian-Ukrainian war in 2022.

The newspaper quoted Erden earlier as saying that he expected construction of the pipeline - which has a length of 3,550 km, including 950 km through Mongolian territory - to begin in 2024, and when asked whether the partners would adhere to this timetable, he said that Russia and China had not They have yet to agree on the important details of the huge infrastructure project.

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“These two sides still need more time to conduct more detailed research on economic studies,” Erden added in an interview, noting that record global gas prices over the past two years have complicated negotiations.

"The Chinese and Russian sides are still making calculations and estimates and working on economic benefits," he said.

Last Thursday, Russian Deputy Prime Minister Alexander Novak wrote in the state-backed Energy Policy magazine that the timing of construction will be determined after signing binding agreements with Chinese partners.

Russian President Vladimir Putin and his Chinese counterpart Xi Jinping met at least twice last year, but while Russia has repeatedly confirmed its readiness to launch the PS-2, Beijing has been conspicuously silent.

China already receives gas from eastern Russia via the First Siberian Energy Pipeline, which began operating in 2019. It carried nearly 23 billion cubic meters of gas last year and is expected to reach its full capacity of 38 billion cubic meters in 2025.

BS-2 is scheduled to carry about an additional 50 billion cubic meters of gas to China from fields on the Yamal Peninsula in western Siberia, which previously served Europe.

Project study

Russia's state-owned Gazprom began a feasibility study for the project in 2020, wants the pipeline to be operational by 2030, and hopes China will replace Europe as the largest export market for its gas.

Europe used to buy more than 150 billion cubic meters of Russian gas annually, but flows have diminished since February 2022, when war broke out in Ukraine and the West imposed sanctions against Moscow.

Sergey Vakulenko, former strategy director of Gazprom, suggested that Russia would seek better financial terms from China compared to what it achieved in the “PS1” contract that was signed in 2014 when gas prices were much lower.

Although the terms of the BS-1 contract are not made public, Vakulenko's analysis of Chinese government payment data indicates that Russia receives much lower revenues than Turkmenistan or Uzbekistan, which also supply China with gas.

"On the one hand, it's a no-brainer for the Chinese, they should get this gas, and on the other hand, Russia has large amounts of stranded gas and wants better terms. I think it's just a negotiation at the moment," Vakulenko said.

The Chinese Foreign Ministry did not comment directly on the negotiations, but said that natural gas is an important aspect of Chinese-Russian cooperation in the field of energy.

Russian openness

In a related context, news agencies quoted Alexander Novak as saying that Moscow is ready to hold talks with the European Union regarding natural gas supplies before the end of an agreement with Ukraine to transport gas in late 2024.

Under a five-year agreement concluded by Moscow with Kiev in 2019, Russia exports gas to Europe via Ukraine in exchange for fees for using a pipeline network.

The Russian Information Agency quoted Novak as saying, "If the other party - which is the European Union - wishes, we are ready for discussions. So far, we do not see any desire for this."

For its part, the Russian Interfax news agency, citing Russian Energy Minister Nikolai Shulginov, reported that gas transportation through Russia's pipeline to Europe via Ukraine may continue after the expiration of the current agreement.

The minister added that Russia believes that European countries that still obtain gas through Ukraine may be interested in future supplies.

Shulginov explained that it is possible to explore other ways to ship gas through Ukraine after 2024.

Ukraine remains an important route for Gazprom's gas flows to the European Union, despite the Russia-Ukraine war.

On Friday, a European Union official refrained from speculating about the chances of extending the gas transportation agreement through Ukraine after 2024, but said that the bloc is evaluating all possibilities and preparing for them.

Source: Al Jazeera + British press