Escalating tensions between Iran and Israel are unintentionally giving a huge boost to Russia's gas ambitions in Asia, as Beijing could soon sign a deal with Moscow on the Power of Siberia 2 gas pipeline - a project worth tens of billions of dollars to ensure energy security in times of uncertainty.
According to Mr. Kirill Babaev, Director of the China-Asia delegation in Moscow and policy advisor to the Russian government, the Israel-Iran conflict has seriously raised the issue of gas cooperation with China.
With increasing risks in the Middle East, increasing gas imports from the North is a strategic advantage for China. We believe that from now until the end of the year, the agreement on the Power of Siberia 2 gas pipeline will be finalized, said Babaev.
Russia has been pursuing the project for years to pump 50 billion cubic meters of gas per year to China via Mongolia, but remains struggling with prices and payment terms. However, with the war between Israel and Iran - now entering its fifth consecutive day - the risk of a disruption of the oil and gas supply chain from the Gulf region is causing Beijing to recalculate.
According to Babaev, Russian President Vladimir Putin's planned visit to China in early September to attend the celebration of the Japanesethrowing victory will be a golden opportunity to accelerate strategic commitments. The trip comes just months after Chinese General Secretary and President Xi Jinping's visit to Moscow in May.
President Putins visit will include discussions on both politics and economics. And energy cooperation is certainly a key content" - Mr. Babaev revealed.
In the context of Russia being isolated by the West due to the conflict in Ukraine, cooperation with China has become increasingly important. Russia-China trade turnover increased by 26% in 2023, but only increased slightly by 1.9% in 2024, and decreased by 7.5% in the first 4 months of this year. However, Babaev is optimistic that new agreements on agricultural products and energy will help reverse the trend.
A major obstacle is cross-border payments, as Chinese banks worry about US sanctions, he said. But up to now, the new mechanisms are operating stably and effectively. We and our Chinese partner understand that money is always quiet, the less it is made public, the more it flows, he said.
At the St. Petersburg International Economic Forum. Petersburg this week will see a large delegation from China, including officials and businesses, attend and hold a direct dialogue with President Putin.
Mr. Babaev said that the Chinese investor has been present in many fields in Russia such as agriculture, petrochemical refining, food, logistics and paper manufacturing. However, they often operate through joint ventures or new brands to "keep a discreet image".
China has entered the Russian market cautiously but persistently. They are not noisy, but very determined - Mr. Babaev commented. And with the Middle East conflict, the door to an unprecedentedly expanding gas super trade.
