Vladimir Putin aims to convince Xi Jinping, with whom he is meeting on Tuesday, during his 25th visit to China, to accept the construction of the “Power of Siberia 2” gas pipeline. The main obstacle remains the price of gas and, although Gazprom is said to have come up with a very advantageous offer, as a source close to the company told Bloomberg, the Chinese side has not given in and wants a price five times lower than what it is currently paying, writes The Moscow Times.
According to the source cited by the agency, Moscow’s objective is to reach an agreement on the gas price by September. However, the progress of the negotiations depends solely on Xi Jinping, and so far there are very few signs that Russia could easily reach an agreement, Bloomberg notes.
A person familiar with the situation told the Financial Times that they doubt Beijing and Moscow will manage to reach an agreement, as China still wants to buy gas at a price close to that of the Russian domestic market. This is heavily subsidized and hovers around the value of 50 dollars per thousand cubic meters. The price is about 12 times lower than the current rates in Europe and five times lower than the amount China is currently paying, which is 258 dollars.
According to the FT source, gas demand in China has likely peaked, which is why Beijing would not want to commit to such long-term obligations.
China is rapidly developing renewable energy and has large reserves of coal. These two major sources of energy should be sufficient to regulate the supply of the economy, whose growth is constantly slowing down.
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