Russia is discussing a major new infrastructure project to deliver gas to China via Mongolia, President Vladimir Putin said on Wednesday, as Moscow looks to Beijing to replace Europe as its major gas customer.
“We are in discussions about the possible implementation of a major infrastructure project, I mean the supply of Russian gas to China via Mongolia,” Putin said in a televised meeting with Mongolia’s Prime Minister Luvsannamsrai Oyun-Erdene.
The two leaders were speaking at Russia’s Eastern Economic Forum in Vladivostok on the same day Putin threatened to switch off energy supplies if the West adopts price caps on Russia’s oil and gas exports.
Russia‘s Gazprom has for years been studying the possibility for a major new gas pipeline – the Power of Siberia 2 – to travel through Mongolia taking Russian gas to China.
The proposed pipeline could carry 50 billion cubic metres (bcm) of natural gas a year, Gazprom says – slightly less than the Nord Stream 1 pipeline which links Russia to Germany under the Baltic Sea.
The existing Power of Siberia pipeline, which runs from Russia to China, was launched at the end of 2019 with an annual capacity of 61 bcm per year. It is set to become a key revenue earner for Russia over the coming years as Europe tries to ditch its historic reliance on Russian gas.
Just before Russia invaded Ukraine, Putin signed a new 30-year contract to supply gas to China. In 2021, Russia exported 16.5 bcm of gas to China.
Before the Power of Siberia launched, almost all of Russia’s pipeline infrastructure was geared towards shipping supplies towards Europe making a pivot to the East a potentially costly and time-consuming endeavour for Moscow. Putin also said on Wednesday that state-controlled oil company Rosneft had reached an agreement with the Mongolian government to expand cooperation over the supply of oil products.