AsianOil: China's balancing of Russian and Central Asian gas
China is relying increasingly on Russian pipelined natural gas, as the Power of Siberia ramps up to its full capacity of 38bn cubic metres per year, potentially as early as 2025.
Furthermore, a supply deal was signed in 2022 for 10 bcm per year of Russian gas via a yet-to-be-built pipeline in the Far East. Meanwhile, negotiations between Beijing and Moscow continue on the construction of an even larger Power of Siberia 2, which would flow as much as 50 bcm per year.
Taking significant quantities of gas from Russia is a prudent move for China, given that it holds all the cards when it comes to bargaining power. Having lost most of its market share in Europe, and with its LNG ambitions languishing under sanctions, Russia has no other means of expanding exports significantly other than China. Beijing can therefore negotiate a cheap price for gas, while likely getting Moscow to pay for the expense of building the pipelines.
However, relying too greatly on a single energy supplier is never a good idea, and goes against China’s traditional strategic priorities. Russia has already shown its willingness to weaponise gas supply in Europe, and there is also the risk of disruptions from all manner of other incidents.
If you’d like to read more about the key events shaping Asia’s oil and gas sector then please click here for NewsBase’s AsianOil Monitor.