Natural gas pipeline deal between Russia and China stalled; As a result of Moscow considering Beijing's demands regarding price and supply levels unreasonable.

Three people familiar with the matter said that China had asked to pay close to Russia's subsidized domestic prices, indicating that it would only commit to buying a small portion of the pipeline's planned annual capacity of 50 billion cubic meters of gas.

According to a report by the British Financial Times, Beijing's hardline stance regarding the "Power of Siberia 2" pipeline focuses on the role of the war in Ukraine in making President Vladimir Putin rely heavily on Chinese leader Xi Jinping for economic support.

The report stated that the approval of the pipeline played a role in raising the fortunes of Gazprom, which has a monopoly on gas exports in the Russian state, by linking the Chinese market to the gas fields in western Russia that previously supplied Europe.

In 2023, Gazprom suffered a loss amounting to 629 billion rupees, equivalent to 6.9 billion dollars, which is the largest loss in at least a quarter of a century, in light of the decline in gas sales to Europe, which has succeeded more than expected in diversifying energy sources away from Russian energy. .

According to people familiar with the matter, an agreement on the pipeline was considered one of three main requests Putin made to Chinese President Xi when they met, as well as more Chinese bank activity in Russia, and for China to ignore a peace conference organized by Ukraine this month.

The sources added that an agreement on the pipeline is still far away, while the proposed cooperation with Chinese banks is still on a much smaller scale than what Russia requested.

Director of the Carnegie Russia Eurasia Center in Berlin, Alexander Gabuev, said that Russia's failure to secure the deal confirms the role of the war in Ukraine in making China the largest partner in relations between the two countries.

Gabuev said that China could need Russian gas strategically as a safe source of supplies that does not depend on sea routes that would be affected in the event of a maritime conflict around Taiwan or the South China Sea, but to make that matter, China needs a very cheap price with flexible commitments. .

It is expected that China's demand for imported gas will reach about 250 billion cubic meters by 2030. This will record an increase from less than 170 billion cubic meters in 2023, according to a study published by the CGEP group in Colombia in May.