RUSSIAN Gas Power of Siberia 2 Pipeline Deal with China Collapses as China Moves Towards Hydrogen
Video Summary
Russia’s economy has been severely impacted by its invasion of Ukraine, particularly in the natural gas sector. Prior to the invasion, Russia was exporting significant amounts of natural gas to Europe through pipelines, but since then, all of its major customers have ceased purchasing gas from it, resulting in a loss of around $150 billion per year. This has left Russia struggling to find alternative buyers, as building liquefied natural gas (LNG) plants requires significant investment and infrastructure. To address this issue, Russia has been trying to persuade China to agree to build a new pipeline, known as Power of Siberia 2, which would have the capacity to transport natural gas from Siberia to China. However, China has been cool on the deal, and it appears unlikely to be signed anytime soon.
Russia’s failure to invest in the LNG industry over the past 30 years has put it at a significant disadvantage, as countries like Australia, Qatar, and the US have become major LNG exporters. To catch up, Russia would need to invest tens of billions of dollars in building new LNG plants, which would take years to construct. In the meantime, the country is facing a major financial crisis, with a significant decline in its revenue from natural gas exports. The future of the Power of Siberia 2 project is uncertain, and it may not be completed. If this is the case, Russia’s natural gas reserves, which account for around 24% of the global supply, may not be monetized, which could lead to higher global prices and a boon for other gas suppliers.
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