A Chinese mouthpiece also says Beijing and Moscow are in disagreement over pricing.

Mongolia, which covers much of the proposed route for the 2,594-kilimeter-long Power of Siberia 2 gas pipeline, has left the project outside the framework of its long-term strategic plan.

The intentional or unintentional failure to include this project in its action program through 2028 may delay the work for a while, putting pressure on Russia’s war-torn finances, according to the South China Morning Post (SCMP), a Hong Kong-based English-language outlet owned by Alibaba Group.

Ruled by a national unity coalition government whose three parties control an overwhelming majority of the 126-seat parliament, Mongolia is making Russia’s life harder, as the Power of Siberia 2 natural gas pipeline connecting Russia and China is regarded as a financial lifeline in times of tough sanctions and the war in Ukraine.

The SCMP blames the pricing disagreements between Beijing and Moscow and growing concerns over secondary sanctions from the West against governments and businesses aiding Russia’s military in Ukraine.

“We are entering a long pause, where Moscow no longer believes it can get the deal it wishes from Beijing and will probably park the project until better times,” Munkhnaran Bayarlkhagva, a former official at the National Security Council of Mongolia, was quoted as saying.

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According to Bayarlkhagva, Beijing is not happy that Gazprom – Russia’s state energy giant – wants to control the Mongolian section of the pipeline “unilaterally” in spite of facing cash troubles.

China, which was asked to finance the project, feels that Russia is cheating: its contractors were not invited to participate in the development of the Mongolian segment and Chinese investment would not automatically translate into Chinese ownership.

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The pipeline – a project jointly overseen by the China National Petroleum Corporation (CNPC) and Gazprom – is expected to take at least five years to complete and would deliver 50 billion cubic meters of gas annually to China, much of which was originally set to supply European clients.

CNPC reportedly asked for a price similar to Russia’s domestic market, a request that is “not suitable for Gazprom,” which expected “something close to European prices.” Russian officials believe that Beijing’s demands are unreasonable and that China simply profits from Russia’s economic turmoil.

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China buys a substantial amount of Russian natural gas – around 75.4 million tons during the seven months of this year alone – but navigates skillfully between Western sanctions, its own geopolitical interests, and economic necessities.

Mongolia’s activity plan actually means that construction of the Power of Siberia 2 pipeline would begin beyond 2028. In the best scenario.

The existing pipeline Power of Siberia 1 is 3,968 kilometers long and has the capacity of 61 billion cubic meters annually. It was commission in 2019.

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