As Sino-Russian relations have become closer and closer, the frequency of high-level interactions has also increased visibly, and recently Russian Prime Minister Mishustin arrived in Beijing again by special plane to begin his second visit this year.
The frequency of coming to China is increasing, and the task is also heavy. Judging from the Russian briefing, Mishustin has many things to discuss with the Chinese side during this trip, including bilateral relations, economic and trade cooperation, infrastructure construction, and so on. But in addition to all this, Mishustin has one of the most important tasks, which is to negotiate the "Power of Siberia-2" pipeline project as soon as possible.
(Mishustin visits China)
According to the Russian plan, the "Power of Siberia 2" pipeline will start construction in 2024, and now the Russian side has basically completed all the preliminary preparations, including the design of the pipeline, the survey of the route, and the finalization of parameters.
But at this critical juncture, there are disagreements between China and Russia about how to cooperate on this pipeline. As for the second gas pipeline between China and Russia, the Chinese side has put forward two different requirements from the past: first, the construction cost of the pipeline will be fully paid by Russia, and second, the Russian side will give another discount on the natural gas sold to the Chinese side.
For the Russian side, the second point of discount is easy to discuss, but in the first point, it is a bit difficult to make the Russian side bear all the costs. Because of the sanctions imposed by the United States and the West, Gazprom, which is in charge of the project, has suffered heavy losses, and now it is operating with 2 trillion reserve currencies prepared before the war, and now there are less than 700 billion left, even if it is all taken out, it is not enough for this project. But it would be better if China was willing to share a little.
Therefore, it can be seen that out of consideration of their respective interests, the cooperation negotiations have reached a stalemate.
(The Power of Siberia 2 pipeline has already finalized all the parameters)
In this case, high-level personnel of the Russian side were dispatched. Before Mishustin came to China, Russian Deputy Prime Minister Novak had already arrived in China two days ahead of schedule and brought with him more than 20 officials in charge of Russian oil and gas to hold intensive talks with the Chinese side on the energy pipeline.
Regarding the progress of the negotiations, Zhang Hanhui, the mainland ambassador to Russia, revealed that due to the huge size of the project, China and Russia need rigorous, systematic and scientific research and demonstration for every detail, and Chinese and Russian enterprises are actively negotiating on the technology, business and cooperation mode of the project.
In addition, Ambassador Zhang Hanhui also said that for this project, what China wants is to achieve a cooperation model of upstream and downstream integration, extend the simple trade between China and Russia to industrial chain cooperation, and establish a more long-term and stable cooperation model with Russia. Therefore, it is hoped that the Russian side can work with China in the same direction and promote the progress of the project as soon as possible.
All in all, both sides are willing to cooperate, but how to cooperate has not yet been discussed.
(Sino-Russian meeting site)
In fact, if we carefully analyze China's remarks, we can find that in this cooperation, China is thinking more long-term.
Unlike Power of Siberia 1, the Power of Siberia 2 project will pass through Mongolia and then to China after the pipeline is completed, adding a risk to Sino-Russian cooperation with third-party involvement.
In this context, China Convenience proposes the "upstream and downstream integration cooperation model", which refers to allowing both parties to get involved in all aspects of the industrial chain, from resource extraction (upstream), to processing (midstream), to distribution and sales (downstream). This model is not only conducive to reducing costs, improving efficiency and enhancing market competitiveness, but also conducive to the diversification of risk management, because it is the entire industrial chain that participates, rather than a single link.
Coupled with the fact that China is one of the world's largest energy consumption markets and the demand for natural gas continues to grow, ensuring a stable supply of natural gas is an important part of China's strategy. By participating in the upstream and downstream operations of the Power of Siberia project, China can better guarantee energy security.
For Russia, the integration of upstream and downstream can improve the efficiency and profitability of the energy supply chain, so that the income from Russian energy exports will naturally increase. In addition, establishing long-term and stable cooperative relations with large energy consumers such as China will help Russia secure sales markets for its energy products and reduce the impact of market fluctuations on the country's economy.
(Sino-Russian Gas Pipeline)
More importantly, for Sino-Russian relations, the formation of a long-term and stable cooperative relationship not only means that the two sides can achieve a win-win situation in terms of economic interests, but also form a close cooperative relationship at the political and strategic levels, which is also of great help to the friendly development of bilateral relations.
Therefore, to sum up, this cooperation model advocated by China is not only focused on short-term interests, but also focuses on long-term strategic security.
In short, Sino-Russian energy cooperation is the trend of the times, there is no doubt about this, but the project is huge, for how to cooperate between China and Russia must be meticulous and thoughtful planning, carefully sort out the details of cooperation, and fully take into account various challenges, ready to deal with measures, to ensure that there is no mistake in future cooperation, so that cooperation can truly achieve mutual benefit and win-win results.