“In the midst of chaos, there is also opportunity”

The Power of Siberia gas pipeline route. Photo: Gazprom

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. 


This entry was posted in China, Energy, Russia, TTG. Bookmark the permalink.

4 Responses to “In the midst of chaos, there is also opportunity”

  1. Fred says:

    “After cutting off gas to European countries,….”

    LOL so Russia was behind sanctioning Russian natural gas sales to Europe. Not.

    “Sun Tzu” I believe Col. Lang called it chop suey Clausewitz.

    “The pipeline, if completed, would divert … natural gas per year that previously supplied Europe to north China, offering a significant boost to Beijing’s ENERGY SECURITY.(emphasis mine)”

    Nothing is being ‘diverted’, they will have a route to an alternate customer for their natural gas. Energy security? How’s Europe’s, and at what cost?

    “It is estimated that it will take six years to complete.”

    Oh look at that, it isn’t even designed yet and wouldn’t be completed until 2030. Sounds like they are stuck using Power of Siberia 1.

    You should also remember back to 2014/5 when Obama attacked the Russians via sanctions:
    “… Russian companies, mostly the big State Owned Enterprises like Gazprom and Rosneft, had a lot of dollar-denominated debt which was about to mature and needed rolling over. So, the US sanctioned Russia such that companies like Gazprom couldn’t roll the debt over, because they couldn’t sell the bonds to US or European investors anymore. The current bondholders had to be paid off… to the tune of north of $50 billion in Q4 of 2014, and another $50 billions in Q1 2015.

    This “rollover risk” would plague the Russian government’s finances for the next 18 months as the price of oil dropped relentlessly.”

    • TTG says:


      Looking at the map, you can see why the POS2 is needed. Only the far eastern oil fields are served by the POS1. The bulk of the fields are far removed from the POS1. And the capacity of the POS1 is far below the pipelines that served Europe. You’re right that China is the winner in this.

  2. Yeah, Right says:

    Fancy that: sovereign countries acting in their own national interests, and not as sycophants to powers greater than themselves.

    How strange that concept must appear to be to a Ukrainian commentator.

  3. James says:


    Russia may have to bargain off some far eastern territory in exchange for China’s economic assistance? The Russian economy is outperforming Germany’s:

Comments are closed.