At the meeting between Russian President Putin and his Chinese counterpart Xi, both countries agreed on higher gas deliveries in future. On the one hand, deliveries via existing pipelines are to be increased, Commerzbank's commodity analyst Barbara Lambrecht notes.

China accounts for a good quarter of Russian gas exports

"The capacity of 'Power of Siberia 1' is to be increased from the current 38 billion cubic meters to 44 billion cubic meters, and that of the Far East pipeline by 20% to 12 billion cubic meters. On the other hand, an additional transit pipeline is to be built across Mongolia, 'Power of Siberia 2', which will transport an additional 50 billion cubic meters of natural gas from the Yamal Peninsula in Western Siberia to China. This would correspond to the transport capacity of Nord Stream 1."

"Although this project has yet to be finalized, it appears that the two countries will become even more closely dependent on each other, with China being promised favorable prices. In recent years, China has become an increasingly important customer for Russian gas. According to the US Energy Information Administration (EIA), China imported around 2.5 times as much gas from Russia last year as it did in 2021."

"This means that the country now accounts for a good quarter of Russian gas exports, up from just 7% in 2021. According to figures from the Energy Institute, China already sourced just under 22% of its gas imports and 37% of its pipeline imports from Russia last year. Europe would benefit because the LNG import requirements of China, the world's largest LNG importer, would be significantly reduced after the construction of 'Power of Siberia 2."