Hormuz crisis shakes global energy markets, but India’s friend plans mega pipeline deal to supply gas to China, country is…

The ongoing conflict involving the United States and Iran has completely changed the global energy market dynamics, leading to the closure of the Strait of Hormuz. Many countries, including China and India, are facing an unprecedented crisis. Amidst the situation, Russian President Vladimir Putin on Wednesday met Chinese President Xi Jinping in Beijing today, on May 20 with a mega plan.

Since the beginning of the Russia-Ukraine conflict in 2022, China has increased its purchases of Russian oil and gas. Both Moscow and Beijing had declared a “no limits” partnership just days before the war began. The energy relationship between the two nations has now become a hot topic of discussion as Putin meets Jinping in Beijing today.

Long-stalled pipeline on agenda

Russia’s long-stalled ‘Power of Siberia 2’ natural gas pipeline is on the agenda. It is expected to be approved in Putin’s high-stakes meeting with Xi Jinping. Recently, the Russian President stated that a consensus has been reached with Beijing on “almost all major issues” related to energy and oil cooperation.

ALSO READ: Watch: PM Modi’s ‘Melody’ toffee for Italian PM Meloni breaks the internet, video goes viral

According to reports, Russia’s energy giant Gazprom supplies natural gas to China via a 3,000-kilometer-long (1,865-mile) pipeline called Power of Siberia. This 30-year, USD 400 billion deal was launched at the end of 2019. Now, Moscow and Beijing are still in talks about a planned 2,600 km Power of Siberia 2 gas pipeline capable of supplying 50 billion cubic meters of gas per year from Russia’s Yamal fields to China via Mongolia.

What China’s Xi Jinping wants?

Russia and China had earlier signed a legally binding memorandum to proceed with the construction in September 2025. However, financing terms, pricing, and a delivery timeline remain unresolved as of now

According to a report by Reuters, China wanted pricing terms for the new gas pipeline to match the domestic rate in Russia (around USD 120-USD130 per 1,000 cubic meters. Meanwhile, Moscow is seeking terms closer to Power of Siberia 1, which experts believe the value will rise to more than two times the current price.

ALSO READ: Vladimir Putin, Xi Jinping expected to visit New Delhi for BRICS Summit in September

Chinese officials interested in accelerating negotiations

Since the closure of the crucial international waterway, Chinese officials have shown keen interest in accelerating negotiations on the long-stalled project amid an oil crisis. Reports added that China has been a key buyer of Moscow’s energy. Its imports of Russian oil climbed 35 percent year over year in the 1st quarter, official customs data revealed. 

Putin makes no mention of new pipeline in joint press meet

At a joint press conference on Wednesday, Putin said his Russia was ready to continue supplying energy to China but made no mention of the new Power of Siberia 2 gas pipeline. However, the Kremlin’s Press Secretary Dmitry Peskov later said both countries had “reached an understanding on the project’s main parameters”.

Russia will sell gas to China at 33% cheaper rates

In the coming years, Russia is expected to sell gas to China at rates approximately one-third lower than those of Europe. This new mega plan aims to bring total Moscow gas flows to Beijing to 52.5 billion cubic meters per year by 2029.

ALSO READ: PM Modi-Trump Meeting: PM Modi to meet Donald Trump for first time amid Iran war; know when and in which country will the meeting take place?