The invasion of Ukraine severely impacted Russia’s economic situation. The West has severely scaled back gas imports. Then there are the sanctions. President Vladimir Putin and his oligarchs are urgently looking for new markets. The Kremlin relies primarily on China. But the example of gas shows how difficult it is for the Russians to do business with the great power in the east.

The British “Financial Times” (FT) reports on current quarrels. Putin’s Prime Minister Mikhail Maschustin recently traveled to China. One of his assignments: He should make progress in negotiations on a new gas pipeline to China. The “Power of Siberia 2” is to transport gas from the Yamal Peninsula to China. According to FT, the pipeline is “the only way to compensate for at least part of the loss on the EU market”.

China is playing for time, Russia has a big competitor

But there is competition for the Russians: China could also decide to build the “Line D” pipeline. This would connect China with Turkmenistan, already a major gas supplier for the Chinese. And while the Russians need a quick decision to save their economy, the Chinese are playing for time.

The “Financial Times” quotes Alicja Bachuiska, a China expert at the European Council on Foreign Relations: “Beijing often drags out negotiations in order to reach a better deal. That was also the case during the negotiations on the ‘Power of Siberia 1’ pipeline.” According to Bachuiska, China is aware that the Russian invasion of Ukraine is escalating into a protracted war. “Beijing believes this will only further strengthen its negotiating position with Russia.”

Russia needs the money – that weakens the position

There are several problems for Russia:

1. Putin needs quick success. The war consumes a lot of money. From his point of view, it shouldn’t be more years before a decision is made. Because this would only be the starting signal for the pipeline to be built at all. The faster, the better, so the premise in Moscow.

2. China has had good experiences with Turkmenistan in the past. According to FT, the Chinese imported more than twice as much gas from the country as from Russia last year. So there is a serious competitor here that the Chinese might even end up favoring.

3. Even with the new pipeline, the Russians couldn’t make up for all the business that has been lost in the West. The Chinese know very well that the Russians can no longer get rid of their gas in the West and can also use this to drive down the price. The FT quotes an analyst as saying that the Chinese want gas from Russia to be even cheaper than from other countries.

China is in a good position. Or as Tatiana Mitrova of Columbia University puts it: “This gas has nowhere else to go.”