China has refused to invest in Power of Siberia 2 gas pipeline and demanded more gas discounts, The South China Morning Post writes. China is unwilling to invest in the new pipeline, offering Russia to pay the multibillion-dollar construction bill in full and demanding discounts on Russian gas, The South China Morning Post reported, citing a source familiar with the situation in Moscow.
Next year, the discount for China will increase to 46%, according to the government’s drafts: gas from the Power of Siberia will cost $271.6 per thousand cubic meters, and for Turkey and Europe – $481.7. But that’s not enough for China. It “can demand deep discounts,” the source says. “In terms of construction, [Beijing] wants to make sure that they have no risks and no costs. Russia is the side that foots the entire bill,” says the source.
Whether Gazprom will find money for the new megaproject remains unclear. After cutting off gas to European countries, the company made a trillion-ruble net loss for the year and faced cash gaps that it had to spend two-thirds of its cash reserves to cover. Of the 2 trillion ruble “cash pile” that Gazprom had before the war, about 700 billion (~$5.56 billion) remained by July 2023.
Even so, Putin hardly has a choice. The Russian president is “under enormous pressure” because if the pipe is not built, Russia will have nowhere to dump “a huge volume” of gas, says the SCMP source. After losing the European market, where more than 150 billion cubic meters of gas a year went at its peak before the war, Gazprom has been forced to cut production by a quarter – a record in its history.
Comment: This is Anton Gerashchenko’s summation of the SCMP article. Clearly he’s seeing it through the eyes of a Ukrainian, but the ideas in both articles are the same. Xi sees opportunity and he’s taking advantage of it. It’s Putin who Xi has draped over the barrel. I sincerely believe that Xi is not thrilled with the Russia-Ukraine war. It’s putting a real kink in his BRI plans, but why not get what he can out of a poor situation. All that talk about friendship without limits is just that… talk. China is selling a lot of drones to Russians, but they’re selling even more to Ukrainians. It’s North Korea and Iran that the Kremlin has to turn to for weapons and ammunition, not China. And China is not totally reliant on Russian gas. She is diversifying her supply sources with Australia, Qatar and Central Asia in addition to Russia.
I don’t think China will invade Russia’s far east, but if conditions don’t vastly improve for Russia, she may have to bargain off some far eastern territory in exchange for China’s economic assistance.
Note: The title of this piece is a quote from Sun Tzu. Colonel Lang never thought much of him, but I always liked him since my days in ROTC.