China and Russia is a 'challenge' for UK says Tobias Ellwood

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It comes after Yuri Ushakov, Mr Putin’s foreign policy adviser, said that Vladimir Putin hosted Mongolian President Ukhnaagiin Khurelsukh at the Kremlin to discuss the Power of Siberia-2 project. It is a proposed huge gas pipeline that would travel through Mongolia and could deliver up to 50 billion cubic meters of Russian gas to China each year. The Power of Siberia 2 Project is expected to begin operating in 2030 and will be owned by both China National Petroleum and Russia’s Gazprom.

Last spring, Mr Putin tasked Gazprom with shifting to the initial stage of the implementation of the Power of Siberia 2 project.

The meeting also came just one day after Vladimir Putin and Xi Jinping met on a video call to discuss issues ranging from the West’s AUKUS nuclear submarine deal to NATO’s eastward expansion.

While both sides still have to agree on pricing for Power of Siberia-2 before construction can go ahead, analysts have tipped that Russia and China are edging closer towards striking a deal.

It has been said that the pipeline, as well as ramping up Russian gas exports to China, will also reduce Moscow’s dependence on European markets and Beijing’s reliance on maritime routes controlled by US warships.

Lin Boqiang, dean of the China Institute for Studies in Energy Policy at Xiamen University told Nikkei Asia: “The advantage is very obvious: Russia has the energy resources and China has the market.

“So, I think Russia and China will reach a final deal for Power of Siberia-2 sooner rather than later, and possibly even more projects are coming if Russia can sell more gas.”

Power of Siberia 2, which would double Russian gas exports to China, has seen little progress despite years of talks on the pipeline.

Now, Alexander Gabuev, a senior fellow at the Carnegie Moscow Center, has said that recent moves with Mongolia indicated that talks between Russia and China are reaching an advanced stage.

Mr Gabuev said that Power of Siberia-2 would give Gazprom “additional leverage when talking with European customers, particularly at a time of heightened tension between Russia and the West”.

He added: “Once the deal is signed, Russia will have an alternative route to ship its gas.

“And while China will not replace all deliveries to the European market, it can take care of a significant chunk – at least one third.”

This comes after Russia slashed volumes of gas travelling into Europe through the Yamal-Europe pipeline last week, which saw European prices spike to record highs, with the benchmark price soaring to almost 800 percent since the start of the year.

Russia switched gas flow to the East, despite usually transiting gas westward.

The pipeline runs from Russia to Belarus and further to Poland and Germany.

According to data from German network operator Gascade, Russia was sending the fuel back to Poland for a seventh straight day on Monday.

Meanwhile Western Europe is scrambling to avert a winter crisis as supplies drop and prices soar.

The move came as Russia hoped to put pressure on the West in order to speed up the certification of Nord Stream 2, another pipeline which Russia say will double Moscow’s export capacity to Europe once it is in operation.

And with the Power of Siberia 2 project on the cards too, Russia’s gas empire could become even more powerful.

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David Fickling argues for Asharq Al-Aswat that instead of bringing up Russia and China closer together, the new deal may give Moscow leverage over Beijing much like it appears to have over the West with Nord Stream 2.

He wrote: “The two Power of Siberia pipelines could give Russia a role in China’s gas imports almost as fundamental as it now has for Europe.

“Right now, China barely buys piped gas from Russia, with LNG still accounting for a bigger share of trade last year while the first line was being brought to full capacity.

“Once completed, however, they would carry a combined 88 bcm, equivalent to 44 percent of a roughly 200 bcm import sector.

“That’s not so different to Europe’s relationship with Moscow, which supplies about 51 percent of its imported gas.”

So instead of a close partnership, Russia could use gas against China if it becomes too dependent on Moscow.

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