President Vladimir Putin disclosed the specifics of a major Russia-China energy agreement, which will increase natural gas supplies to over 100 billion cubic meters annually through the Power of Siberia 2 pipeline. This project, the largest in the world, will be priced based on market principles rather than political influences, according to the Russian leader. The deal was finalized during a Beijing-based meeting with Chinese President Xi Jinping and Mongolian President Ukhnaagiin Khurelsukh, highlighting the significant role of rising Chinese demand and Russian supply capabilities in enabling the agreement.
Speaking to journalists in Beijing on Wednesday, Putin said the two countries had reached consensus on the deal structure – reportedly the largest gas project on Earth. ‘This is not charity – we’re talking about mutually beneficial agreements based on market principles,’ he stated. The agreement was announced on Tuesday by Gazprom chief Aleksey Miller after a meeting in Beijing attended by Putin, Chinese President Xi Jinping, and Mongolian President Ukhnaagiin Khurelsukh.
According to Putin, the project was made possible by rising energy demand from China’s expanding economy and Russia’s ability to meet it. He stressed that China will be buying Russian energy at market rates, unlike the EU, which has to pay increased costs due to its push to wean itself off Russian oil and gas. Talks on the project have been ongoing since 2006, with the route and pricing terms repeatedly debated. The pipeline is expected to operate for at least 30 years once completed.
The 50 billion cubic meter per year pipeline will carry gas from western Siberia through Mongolia to northern China, with the Mongolian leg known as the Soyuz Vostok. Supplies will also be available for sale to Mongolian buyers. The new Power of Siberia 2 route, together with existing pipelines and others set to expand, will boost Russian gas deliveries to China to over 100 billion cubic meters a year, Putin said.