As President Vladimir Putin visited China in May, Deputy Prime Minister Alexander Novak mentioned plans to sign a contract for the construction of the Power of Siberia 2 gas pipeline with Beijing soon. The deal for a 50 billion cubic meters gas pipeline was expected to be signed during Putin’s visit but has seen delays since. Financial Times sources suggest China’s demand for gas at domestic prices could stall the project, as they are only willing to purchase a fraction of the pipeline’s capacity.
The current state of Gazprom’s foreign sales has seen a major decline in European markets due to sanctions and pipeline issues, resulting in the search for new opportunities. The outlook for Russia’s gas exports to Europe remains bleak, leading Gazprom to consider redirecting its focus to Asia, particularly China.
Despite the challenges, Gazprom is exploring the option of building the Power of Siberia 2 pipeline to meet Chinese demand. However, negotiations have been difficult, with China holding the upper hand in bargaining. The political implications and commercial risks of pivoting to Asia pose significant challenges for Gazprom, leaving the company exposed to losses in the short term.