Xi Jinping Again Denies Putin New Russian Gas Contract

Vladimir Putin and Xi Jinping. Photo: Kristina Solovyova, Sputnik, Kremlin Pool Photo via AP

According to the project, which has been discussed for more than 10 years and envisions an increase in gas supplies to the PRC to 100 billion cubic meters per year, "nuances" remain unagreed, announced presidential press secretary Dmitry Peskov after Putin's talks with PRC Chairman Xi Jinping.

"Some nuances still need to be agreed upon," Peskov said, adding that "key parameters of understanding" and the route of the future pipeline have been agreed, but there are still no firm agreements on the project's implementation timeline.

"There is nothing concrete yet. This is commercial information, after all. But it is quite a significant achievement," Interfax quoted Peskov as saying.

Putin brought a large delegation with him to Beijing, including 5 deputy prime ministers, 8 ministers, and heads of major state-owned companies, including Gazprom and Rosneft. During the visit, he spoke of the "boundless prospects" of Russian-Chinese cooperation and promised to "uninterruptedly" export oil, coal, and gas to the PRC.

Following the talks, Moscow and Beijing signed 40 documents. However, none of them mention either Power of Siberia-2 or cooperation in the oil and gas sector, according to the list published by the Kremlin.

The stumbling block for the new gas pipeline, which is desperately needed by Gazprom, which has lost the European market, remains the price of gas, a source familiar with the situation told the Financial Times earlier. According to her data, China demands a price reduction to a level close to Russia's domestic price. This is about $50 per thousand cubic meters, which is 5 times lower than Beijing currently pays ($258 per thousand cubic meters), and 8.5 times less than Gazprom's prices for other customers in distant foreign countries ($420).

Furthermore, China is concerned that gas demand may have peaked, and therefore doubts the necessity of taking on additional obligations to purchase it, an FT source said.

Currently, the PRC buys 38 billion cubic meters of gas annually from Russia — this is half of Gazprom's exports to distant foreign countries, which remain at levels close to their lows since the late 1980s. By the end of the decade, the Russian government expects to increase supplies to China by 47%, to 56 billion cubic meters per year. Additional gas will be supplied via the Far Eastern route (12 billion cubic meters) and by expanding the capacity of Power of Siberia-1 (6 billion cubic meters).

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