Mongolia has omitted the much-anticipated Power of Siberia 2 gas pipeline from its national development plan for 2028, casting uncertainty over the future of this ambitious project, according to a report by The South China Morning Post.
The exclusion suggests that the massive energy infrastructure project, which would connect Russia’s gas fields with China via Mongolia, may be stalled indefinitely.
The Power of Siberia 2 pipeline was intended to serve as a significant link between Russia and China, running through Mongolia’s vast territory. At an estimated length of 2,500 kilometres, the pipeline was designed to export 50 billion cubic metres of natural gas annually from Russia’s gas-rich Siberian regions to meet China’s energy demands. For Russia, this would have been a crucial channel for diversifying its energy exports, especially after the steep decline in gas supplies to Europe amid Russia’s war in Ukraine.
The project, which had an anticipated cost ranging between $8 and $15 billion, was seen as a potential boon for Mongolia. The nation hoped that the pipeline’s construction would trigger an influx of foreign investment, improve its infrastructure, and potentially offer economic benefits through the transit fees and associated employment opportunities. However, the project’s exclusion from Mongolia’s 2028 development agenda signals that these hopes may not be realised anytime soon.
Geopolitical and Economic Context
The Power of Siberia 2 pipeline has been a key part of Russia’s energy strategy since it would allow Moscow to partially offset the loss of its European market due to Western sanctions and the ongoing conflict in Ukraine. Yet, the project’s future now appears uncertain. According to Munkhnaran Bayarlkhagva, a former official with Mongolia’s National Security Council, the omission from the development plan reflects a “long pause” in negotiations between Moscow and Beijing. He added that the Kremlin may have tempered its expectations of a favourable deal with China, prompting a decision to put the project on hold until more opportune conditions emerge.
Russia’s financial constraints also weigh heavily on the pipeline’s prospects. As pointed out by Li Lifan, a researcher at the Shanghai Academy of Social Sciences, Russia lacks the funds to pursue the project with the necessary vigour. Moreover, China, which would be the main consumer of the gas, is in no hurry to proceed with construction. Beijing appears to have a cautious approach, possibly due to concerns over over-reliance on Russian energy, fluctuating demand, or political hesitations in the current global climate.
Mongolia’s Calculated Exclusion
Mongolia’s decision to exclude the Power of Siberia 2 from its development plan is a significant one. It signals that the country, while eager for foreign investment and development opportunities, is cautious about committing to a project that lacks the certainty of timely completion. The Mongolian government likely recognises that both Russia and China are currently focused on other priorities, and it is unwilling to divert national resources or expectations towards a project mired in uncertainty.
In essence, Mongolia appears to be waiting for more concrete guarantees from both Moscow and Beijing before moving forward. In a broader context, the decision could also reflect Mongolia’s efforts to maintain a balanced foreign policy amidst the delicate power dynamics between its two giant neighbours.
Read also:
Russia’s Attempt to Re-enter the European Gas Market, by Mykhailo Gonchar
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