Putin seeks to advance gas pipeline project during talks with Xi – Bloomberg

Russian leader Vladimir Putin, who is travelling to Beijing on 19 May for talks with Chinese leader Xi Jinping, is planning to discuss a project to build a gas pipeline to China.

Source: Bloomberg

Details: According to people close to the government, Russia hopes that turmoil in global energy markets caused by the conflict in the Middle East will encourage China to show greater flexibility in negotiations over gas pricing for the planned Power of Siberia 2 pipeline project.

One Russian official said Chinese representatives had expressed interest in speeding up negotiations, although no significant progress has yet been achieved.

Yuri Ushakov, Putin's aide on foreign policy issues, also stressed that the pipeline issue "is on the agenda".

"'We're committed to discussing it seriously. I believe this topic will be discussed in great detail between the leaders," he told journalists on 18 May.

However, Bloomberg noted that progress towards any agreement depends largely on Xi and there are currently few signs that Russia will be able to secure a deal easily.

"With its economy under growing strain, Russia is heavily reliant on trade with China to weaken the impact of Western sanctions over the full-scale invasion of Ukraine that's in its fifth year. US President Donald Trump's war with Iran may give Moscow an opportunity to rebalance the relationship as Beijing looks for greater energy security amid disruption caused by the closure of the Strait of Hormuz," Bloomberg said.

According to a source close to the Russian state energy giant Gazprom, the company has made a very attractive pricing offer for gas supplies through the Power of Siberia 2 pipeline, which would run from Siberia to China via Mongolia, although Chinese partners have shown little enthusiasm for advancing the project. The source added that Russia wants to agree on gas prices by September.

In March, following the outbreak of war in Iran, China stated that it intended to make progress on the Russian gas pipeline project as part of its five-year plan. In late April, Gazprom SEO Alexei Miller and China National Petroleum Corporation Chairman Dai Houliang met in Beijing and discussed the "the development of strategic partnership".

On 9 May, Putin said that "virtually all the key issues" concerning cooperation in the gas and oil sectors had been agreed with China.

"If we manage to finalise them and bring the process to a final point during the visit, I would be very pleased," he said.

Although transport corridors through Russia have long been part of bilateral discussions, Bloomberg sources say Moscow is now seeing greater interest from Chinese officials in expanding overland transit routes and the Northern Sea Route in the Arctic. The war in Iran has also influenced this shift.

Ushakov said Putin and Xi are expected to hold talks on 20 May and later continue discussions over tea in the evening.

The Russian delegation includes five deputy prime ministers, eight ministers and Central Bank Governor Elvira Nabiullina, as well as heads of state corporations and leading businesses.

The meeting will take place after Xi's summit with Trump.

Bloomberg noted that this is the second time this year Xi has held diplomatic talks with Trump and Putin in close succession. The Chinese leader held separate phone calls with the US president and the Kremlin leader within the space of several hours in early February.

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