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FT: Russia's proposed gas pipeline to China hindered by construction delays

by Nate Ostiller January 28, 2024 7:08 PM 2 min read
CEO of Russia's gas giant Alexei Miller (L), Russian President Vladimir Putin (2nd L), and Chinese Vice Premier Zhang Gaoli (R) attend the ceremony marking the welding of the first link of "The Power of Siberia" main gas pipeline on Sept. 14, 2014. The "Power of Siberia 2" pipeline, following the completion of the first pipeline, has seen construction delays. (Alexey Nikolsky/Ria Novosti/AFP via Getty Images) 
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A planned gas pipeline connecting Russia's Yamal Peninsula through Mongolia to China faces construction delays, Mongolian Prime Minister Luvsannamsrain Oyun-Erdene said in comments published by the Financial Times (FT) on Jan. 28.

Construction of the pipeline, referred to as Power of Siberia 2, was scheduled to begin in 2024. The proposed pipeline would strengthen Russia's ability to export gas to China, which is increasingly important for Russia after Europe declared its goal of weaning itself from dependence on Russian energy.

Oyun-Erdene said that China and Russia have not yet agreed on some of the crucial details of the planned 3,550-kilometer pipeline.

"The Chinese and Russian sides are still doing the calculations and estimations and they are working on the economic benefits." Oyun-Erdene said.

Russian Deputy Prime Minister Alexander Novak said that the construction schedule would be finalized after a forthcoming contract with the Chinese side but did not specify a timeline.

Responding to the FT, China's Foreign Ministry did not comment specifically on the construction delays.

Stuck between two larger and significantly more powerful neighbors, Mongolia has struggled to remain neutral regarding Russia's full-scale invasion of Ukraine.

Mongolia is still almost completely dependent on Russia for fuel, and more than 90% of Mongolian exports go to China.

Despite Russian efforts, Mongolia has refrained from actively supporting Russia's full-scale war but also abstained from voting at the UN to condemn it.

One of the few democracies in the region, Mongolia has sought to increase its ties to the West, but its efforts are limited by its two neighbors. There are concerns that a strong anti-war position from Mongolia could trigger a damaging response from Russia, such as cutting off fuel supplies to the country.

“We always stand for a cooperation between other countries,” Oyun-Erdene told FT.

Russian media: Foreign shareholders suspend participation in Russian Arctic LNG-2 project
The project is run by the private company Novatek, Russia’s largest producer of LNG, which has a 60% share. The Chinese, French, and Japanese companies represented the remaining 40% of shares. The foreign companies all declared force majeure on the project.
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