Putin promotes discounted energy supplies to Mongolia, pushes pipeline to China
Nation3 September 2024, 02:35 PM
Russia has always "responded to requests from Mongolian friends for help in meeting growing fuel needs at preferential prices," he said.
The countries "are linked by decades of fruitful cooperation," and developing the partnership with Mongolia "has been and remains one of the priorities of Russian foreign policy."
Putin arrived in Ulaanbaatar on Sept. 2 for his first official visit in five years.
The Power of Siberia 2 pipeline, which is expected to have a capacity of 50 billion cubic meters per year and pass through Mongolian territory, could potentially replace Gazprom's loss of more than 150 billion cubic meters per year of gas pumped to the European gas market.
However, Mongolia has not included the pipeline in its national development plan for the next five years, indicating a lack of agreement between Russia and China.
In 2022, Putin proposed to his Chinese counterpart, Xi Jinping, to increase Russian gas purchases to 100 billion cubic meters per year, but Beijing did not give the green light for construction. The sticking point was the price of the gas: China demanded that it be lowered to Russia's domestic level, about $60 per thousand cubic meters. This is four times cheaper than Russian gas currently costs China: $260 per thousand cubic meters through the Power of Siberia-1 pipeline.
By the end of 2023, the Russian authorities claimed that the Power of Siberia-2 project was in a high state of readiness and that the project documentation would be approved in the first quarter of 2024. "After that, construction could begin," said Victoria Abramchenko, who was serving as deputy prime minister at the time.
Mongolia had hoped for an influx of investments from the pipeline, estimated to cost between $8 billion and $15 billion. However, “Russia has no money, and China is in no hurry to build,” said Li Lifang, an expert from the Shanghai Academy of Social Sciences, adding that Beijing may also fear increased Russian influence in Mongolia.