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Russia-China gas deal ran aground over Beijing's tough demands, FT reports

by Martin Fornusek and The Kyiv Independent news desk June 3, 2024 11:32 AM 2 min read
Russian leader Vladimir Putin and China's leader Xi Jinping at the third Belt and Road Forum for International Cooperation in Beijing on Oct. 18, 2023. (Grigory Sysoyev/Pool/AFP)
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Talks between Russia and China on a key gas pipeline deal have reached a dead end as Beijing seeks to exhort tough conditions on price and supply levels, the Financial Times (FT) reported on June 2, citing its three undisclosed sources.

China has become a key lifeline for Russia's economy after the West sought to wean itself off Russian fossil fuels in the wake of the full-scale invasion of Ukraine.

Beijing is now using Moscow's growing dependency to gain advantageous conditions on the Power of Siberia 2 pipeline, the FT wrote.

According to the outlet's sources, China has asked to "pay close to Russia's heavily subsidized domestic prices and would only commit to buying a small fraction of the pipeline's planned annual capacity of 50bn cubic meters of gas."

Approval of the project would be crucial for the Russian state-owned gas giant Gazprom, which lost some $6.9 billion last year due to dropping sales to Europe.

Russian leader Vladimir Putin reportedly sought to convince his Chinese counterpart, Xi Jinping, to finalize the deal during the former's visit to China in May.

Notably, Putin's delegation did not include Alexei Miller, Gazprom's chief executive, whose presence would have been "essential for any serious negotiations with China," the FT wrote.

An agreement remains distant, and Beijing's position underscores how Moscow's full-scale war against Ukraine made China the senior partner in the relationship, according to the outlet.

Bloomberg wrote in April that Russia is expected to export natural gas to China with prices as much as 28% below those for Russia's European clients at least until 2027.

Opinion: Putin’s China visit was another battle in Russia’s war of economic endurance
Russian President Vladimir Putin sent a clear signal to the West last week: China stands firmly behind Russia. Putin made his first foreign trip since his inauguration to Beijing to meet with President Xi Jinping on May 16. The visit came after a cabinet reshuffle in Russia the week prior,

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