China Rethinks Russian Pipeline Plans
China's Shift in Pipeline Project
China seems to be reevaluating the Power of Siberia 2 gas pipeline project with Russia, as suggested by Mongolia's decision to exclude funding for the pipeline in its economic plan. Turkmenistan is becoming a preferred gas supplier for China, with increased collaboration and higher gas export revenue than Russia in 2024. Experts believe that China views Turkmenistan as a more manageable partner for energy projects, given its political environment and simpler economy.
Russia and China: Frenemies in Energy
Russia and China, who have been allies in war, seem to have a complex relationship when it comes to energy. This could result in Turkmenistan becoming the main beneficiary of Beijing's increasing need for natural gas. Just a few months ago, Russian and Chinese officials were stating that an agreement to build a new gas pipeline connecting the two countries, known as Power of Siberia 2, was on the horizon. However, it now seems that those plans have been paused. Mongolia's recent decision not to include funding for pipeline construction in its five-year economic plan is widely interpreted as a sign that China is rethinking the pipeline project.
Power of Siberia 2 and Its Implications
The Power of Siberia 2 is expected to transport up to 50 billion cubic meters of gas annually from western Siberia to China via Mongolia. This operation would provide much-needed revenue for Russia, which is struggling to fund its war in Ukraine. China has been a crucial supporter of Russia, assisting the Kremlin to overcome sanctions imposed by the West. However, the pause on the Power of Siberia 2 project implies that Beijing's alliance does have limits.
China's Growing Ties with Turkmenistan
While China is leaving Russia in suspense on energy cooperation, it is strengthening its relationship with Turkmenistan. For instance, a group of Turkmen students spent the summer taking a training course at Petroleum University in Beijing. Alexey Chigadayev, a regional expert, was quoted by RFE/RL as saying that a new pipeline connecting China and Turkmenistan is more beneficial for Beijing. He explained that China would have more control over such a pipeline during both the construction and operational phases. Moreover, negotiating with Turkmenistan's political leadership is also easier due to its higher level of authoritarianism and simpler economy.
Turkmenistan Outpaces Russia in Gas Supply to China
In 2024, Turkmenistan is surpassing Russia in supplying gas to China in terms of revenue. A report published by an Uzbek news outlet stated that Turkmenistan was China's top gas supplier during the January-July period, exporting $5.67 billion in gas. Russia came second with $4.69 billion in sales. Additionally, Kazakhstan also supplied over $730 million worth of gas to China during this period.
Bottom Line
China's reconsideration of its pipeline project with Russia and its growing ties with Turkmenistan highlight the complex dynamics of international energy politics. It also underscores the strategic decisions countries make to ensure their energy security. What are your thoughts on this development? Feel free to share this article with your friends. Don't forget to sign up for the Daily Briefing, which is delivered every day at 6pm.
