Mongolia omits Russia-to-China Power of Siberia 2 pipeline project from action plan for years ahead

Mongolia’s action plan through 2028 reportedly does not include the Power of Siberia 2 natural gas pipeline project to connect Russia and China across 2,594 kilometres (1,612 miles) of its territory.

The programme was released on August 16 by the country’s new “national unity” coalition government that took office following elections in June.

In reporting the omission, the South China Morning Post (SCMP) cited analysts attributing it to unresolved gas pricing disagreements between Beijing and Moscow as well as geopolitical factors, such as anxieties over potential secondary sanctions applied by Western countries against those seen as involved in cooperations with Moscow that aid Russia’s military in Ukraine.

“We are entering a long pause, where Moscow no longer believes it can get the deal it wishes from Beijing and will probably park the project until better times,” Munkhnaran Bayarlkhagva, a former official at the National Security Council of Mongolia, was quoted as saying, adding that China may not be happy with Russian state energy giant Gazprom over a perception that the corporation wants to “unilaterally” control the Mongolian section of the pipeline.

“This would have meant a sudden and long-term increase of Moscow’s influence in Mongolia, to the detriment of Beijing,” he added. “Though never explicitly verbalised, it would have been ‘fair’ to include the Chinese into the Mongolian section’s development from the beginning.”

The pipeline would deliver 50bn cubic metres (bcm) of gas annually to China, replacing some of the gas volumes Russia can no longer send to Europe given the war sanctions.

The SCMP reported Anna Kireeva, associate professor at the Moscow State Institute of International Relations, as saying that, reportedly, Chinese CNPC gas officials asked for a Pipeline of Siberia 2 gas price similar to Russia’s domestic market. This request was “not suitable for Gazprom,” she said, as “great financial resources” will be required in the construction of the pipeline.

“[These differences] can be overcome as the project is in the interests of both Russia and China, but the two sides should be ready for a healthy compromise,” Kireeva added. “It is difficult to make a prognosis on the further course of negotiations.”