China frustrates Russia by prioritizing gas supplies from another country

Despite the fact that Turkmenistan’s gas is 30 percent more expensive than Russia’s, and possible discount negotiations with Ashgabat did not yield results, Beijing gave the green light to the “D Line” project, where Turkmenistan will supply 30 billion cubic meters of gas per year to China. via Kyrgyzstan.

According to Reuters, China’s state-owned oil and gas company CNPC began developing technical-economic plans last week to build a 200-kilometer gas pipeline from Kyrgyzstan to China’s Xinjiang province, where the first gas distribution point could be located.

“This means that preparations for Line D are underway,” a “Reuters” source said, noting that construction of internal highways on Chinese soil could begin as early as next year. In 2022, China imported 35 billion cubic meters of natural gas from Turkmenistan for $10.3 billion through three existing natural gas pipelines. Deliveries to Russia through the Sila Sibiri gas pipeline, which opened in 2019, amounted to 16 billion cubic meters per year, but the cost of gas was only four billion dollars.

Meeting with Chinese leader Xi Jinping in the Kremlin, Putin offered to increase gas supplies to China sixfold – up to 98 billion cubic meters of gas per year. Despite Putin calling Xi “my dear friend” and even speaking Chinese, Russia still has not received the long-awaited gas contract.

Despite all the efforts of Russia and declarations of “unbreakable strategic partnership”, China trusts Turkmenistan.

A Chinese official familiar with CNPC’s global strategy told Reuters, “Central Asian gas pipelines are a key point for China in the energy and geopolitical fields. This supply channel has great strategic value that transcends commercial aspects.”

As for Russia’s offer, China can use it to its advantage – “to get a better price for Line D”. Later, it was not ignored that Beijing signed agreements with both Russia and Turkmenistan.

The visit of Russian Prime Minister Mikhail Mishustin to China was aimed at expanding economic ties with China. However, he also failed to improve the situation. A large delegation of Russian officials, consisting of two ministers and four deputy prime ministers, returned empty-handed from Shanghai – failing to get China’s approval for the “Sila Sibiri-2” project. Xi Jinping did not say a word in his statements to the press after discussions about the project.

A new gas contract with China is critical for Russian gas giant Gazprom, as the company lost access to the most important European market, where more than half of its gas was exported, at the beginning of last year.

“Gazprom’s export situation is disastrous,” a source close to the company told Reuters in March. China will receive 22 billion cubic meters of natural gas from Russia this year, seven times less than the European Union consumes. The value of these deliveries was $290 per thousand cubic meters, while gas was supplied to Europe for even $1,000.

“The problem is, China doesn’t need extra gas,” said Beth Odgerell, senior analyst at the Energy Policy Research Foundation.

China does not want to repeat Europe’s mistakes and wants to diversify its gas supply, and that’s okay – China buys gas from Qatar, the USA, Australia, and Turkmenistan is also interested in becoming China’s gas supplier.

“This is a buyers market. If Russia doesn’t come up with a very attractive offer, China could be dragged along.” [ar “Sila Sibiri-2″] as long as he wants,” said the expert.