THE prospect of a major new Russian gas pipeline to China, dubbed Power of Siberia 2, has been stalled for years.

With the EU aiming for an outright ban on Russian gas by 2027 (much the annoyance of a few of its gas reliant member states), Moscow has been increasingly pushing the agenda with Beijing.

Xi Jinping, however has been more cautious. Gas demand growth has been slowing and Beijing is wary of excessive dependence on a single supplier, particularly one besieged by so many sanctioned-related barriers.

Russia’s embattled Arctic LNG 2 venture offers a case study in the fragility of such mega projects.

The US directly sanctioned Arctic LNG 2 in a bid to ensure that the project, thought to have cost in the region of $25bn to construct, would be rendered “dead in the water”. And while the Putin-backed plan has limped on, it is far from healthy.

The recent flurry of loadings and apparent shift in Beijing’s willingness to accept sanctioned Russian gas does little to ameliorate the immediate bottlenecks left in this once grand plan.

The Power of Siberia 2 plan, however, might be a different beast entirely.

It is too soon to assess the impact on seaborne LNG, but if the 50bn cu m per year plan does come off (and there some sizable ifs and buts attached to the announcements), that rather puts a new spin on final investment decisions for LNG export terminals yet to be given the green light.

As far as Russia is concerned, it could help offset nearly half of the gas exports to Europe that Russia has lost since the Ukraine war began, albeit via pipeline rather the ship.

This is about more than LNG though.

The pipeline deal is a win for Putin, not least in terms of replacing lost revenue.

Xi, meanwhile, has emphasised China's role as a stable trading partner, while US president Donald Trump's tariffs have upended economic relationships around the world.

The amount of Russian crude being delivered to China is increasing. Sanctioned gas is flowing. China is picking up the slack after US President Donald Trump’s punitive tariffs on India.

Pictures of Xi and Putin sipping tea at the Chinese leader’s official residence this week are a carefully calculated show of solidarity between the two strongmen seeking to present a new, non-US centric, world order.

Their plans will shape maritime trade flows for years to come.

Richard Meade
Editor-in-chief, Lloyd’s List

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