Russia’s attempts to conclude a major gas pipeline deal with China have run aground over what Moscow sees as Beijing’s unreasonable demands on price and supply levels, the Financial Times reported on Sunday citing three people familiar with the matter.
China had asked to pay close to Russia’s heavily subsidised domestic prices and would only commit to buying a small fraction of the pipeline’s planned annual capacity of 50 billion cubic metres of gas according to the report.
Russia has been in talks for years about building the Power of Siberia-2 pipeline to carry 50 billion cubic metres of natural gas a year from the Yamal region in northern Russia to China via Mongolia.
Russian Deputy Prime Minister Alexander Novak said last month that Russia and China expect to a sign a contract “in the near future” on the Power of Siberia-2 gas pipeline.
Weeelll, they do still export a lot even to countries that have nominally sanctioned them. Obviously less nowadays than before the full-scale invasion of Ukraine, but China definitely isn’t their only export destination for petrochemicals:
What might screw Russia over is their reliance on Chinese imports, however. Everything they need for eg. maintaining that oil production – let alone consumer products – has to come from somewhere, mostly either from dodging sanctions (making it more expensive and slower) or from China
I assume the bigger problem is the switch to a wartime economy that has no good outcome. All that production is not going toward future productivity, in fact, quite the opposite. I am no expert in this but that’s my view.
I don’t know if China can afford to cut off Russia but it looks like they control enough of that income pie that it’s a very effective threat. Maybe not full control “vassal state” but it’s a pretty strong position for negotiations and how’s that going to get weaker over time? Then again I’ve heard China’s economy isn’t that great right now.
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You have no leverage when you only have one remaining economy to sell things to.
Russia is going to be turned into a Chinese vassal state.
Weeelll, they do still export a lot even to countries that have nominally sanctioned them. Obviously less nowadays than before the full-scale invasion of Ukraine, but China definitely isn’t their only export destination for petrochemicals:
(source for graph)
What might screw Russia over is their reliance on Chinese imports, however. Everything they need for eg. maintaining that oil production – let alone consumer products – has to come from somewhere, mostly either from dodging sanctions (making it more expensive and slower) or from China
I assume the bigger problem is the switch to a wartime economy that has no good outcome. All that production is not going toward future productivity, in fact, quite the opposite. I am no expert in this but that’s my view.
Oh yes absolutely, I meant it more as in what’d be likely to make Russia a “vassal state” to China
Oh, right, missed the context.
I don’t know if China can afford to cut off Russia but it looks like they control enough of that income pie that it’s a very effective threat. Maybe not full control “vassal state” but it’s a pretty strong position for negotiations and how’s that going to get weaker over time? Then again I’ve heard China’s economy isn’t that great right now.