Negotiations on Power of Siberia-2 stalled due to disagreements on gas prices

The meeting between Russian President Vladimir Putin and Chinese President Xi Jinping on August 31 in Bishkek at the Shanghai Cooperation Organization (SCO) summit did not help achieve progress in negotiations on the Power of Siberia-2 project. The Chinese South China Morning Post (SCMP) writes about this with reference to its sources.

The publication's interlocutors call the key problem the fact that Beijing is interested in buying gas at a price of about $50 per thousand cubic meters, that is, at a subsidized rate for Russian citizens, or at least at $120-130, which is the tariff for industrial consumers within the country.

However, Moscow wants to receive $250-260 per thousand cubic meters, which is comparable to the tariff of the first Power of Siberia and noticeably lower than the cost of gas for Europe before the conflict in Ukraine. The parties have not yet been able to reach a compromise on this issue, which is why the discussion has stalled.

Against this background, the head of the Russian Ministry of Energy, Sergei Tsivilev, without explanation, announced that the potential route would be renamed or has already been renamed “The Power of Baikal.”

Experts interviewed by the publication suggested that the statement was intended to remind domestic audiences of the project at a time when China is in a stronger negotiating position. Beijing has no particular reason to rush to approve the project, so it does not comment on the progress of the discussion and is ready to wait.