Russia Confident in Finalizing Power of Siberia 2 Pipeline Deal with China

Russia remains confident in reaching an agreement with China on the Power of Siberia 2 gas pipeline, despite a Financial Times report indicating stalled negotiations over pricing. Kremlin spokesman Dmitry Peskov emphasized the political commitment from both nations' leaders. The deal has been a decade in the making, with price being a major sticking point.

(Adds detail, quote in paragraphs 3-6) MOSCOW, June 3 (Reuters) -

Russia said on Monday there was no doubt it would reach an agreement with China to build the new Power of Siberia 2 gas pipeline, after a Financial Times report said the deal had stalled over Chinese price demands. The FT said 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.

Kremlin spokesman Dmitry Peskov told reporters there was political will from presidents Vladimir Putin and Xi Jinping to reach a deal, so talks on the pipeline would continue, but the commercial aspects were not to be made public. "It is completely normal that each country defends its own interests," he said.

"The process of agreement of commercial issues will continue, and we have no doubts that all necessary agreements will be reached." Putin and Xi had agreed to deepen their dialogue over energy when the Russian leader visited Beijing last month, Peskov said.

Russia has become China's top oil supplier thanks to Moscow's push to divert its trade away from Europe because of Western sanctions over Ukraine. But talks over the yet-to-be built Power of Siberia 2 have dragged on for about a decade over numerous issues, including the price of the gas.

The project is a planned successor to the original Power of Siberia pipeline, through which Russia already pumps gas to China. Supplies started at the end of 2019 and are due to reach annual capacity of 38 bcm in 2025.