How Moscow Can Use Gas to Pressure Europe

Europe is currently facing a gas deficit, exacerbated by a reduction in the volume of gas imported from Russia. As a result, prices have been rising. However, the situation regarding Russia's gas supply may worsen, as Moscow plans to construct a new gas pipeline to China, its largest buyer.

According to Voice of America, Russia is already supplying natural gas to China from its Siberian gas fields. The gas pipeline, named Power of Siberia 1, was opened in 2019.

Tom Marzec-Manser, head of gas analytics at ICIS, believes that Power of Siberia 1 utilizes gas that is not connected to deposits supplying the European market. Therefore, he states, there is currently no discussion of supplying gas to China at Europe's expense.

However, the situation may change soon. Moscow and Beijing are close to agreeing on a second pipeline, Power of Siberia 2, which would double the gas exports from Russia to China. This pipeline will traverse Mongolia and industrial zones near Beijing and will also connect to Russia's internal gas network, linking China to the gas fields in Russia’s Yamal Peninsula that supply Europe.

Marzec-Manser emphasizes that this offers Gazprom, as a major exporter, the opportunity to redirect gas from one market to another, thereby potentially giving Russia significant leverage.

Philippe Medunik, an analyst at the European Council on Foreign Relations, contends that it is technically difficult to determine whether the pricing system will develop in a way that allows gas to be sold to the highest bidder, but he asserts that Russia is definitely intent on acquiring such leverage.

Russia has amassed over 100,000 troops near its border with Ukraine. The West has threatened sanctions if Russia invades Ukraine. Analysts believe that Moscow has other motives as well to find new markets for its gas.

However, establishing a presence in the Chinese market will not be easy for Moscow, analysts say. According to Medunik, China is known as a tough negotiating partner that uses its political, economic, and military clout. Beijing views itself as the leader in this relationship, considering Russia a junior partner.

The deal concerning the Power of Siberia 2 pipeline is anticipated to be signed during the Winter Olympics in Beijing next month, although no official confirmation has yet been made.