A gas business involving hundreds of billions of dollars is being fiercely played between China, Russia and Mongolia. Russia wants to sell gas at a high price, China wants a discount, and Mongolia, caught in the middle, wants to earn a toll but is afraid of being squeezed by both sides.
In the end, business in the world is all about two words: making money. As long as there are people selling and people buying, there will be people in the middle who want to take a cut. Now, China, Russia and Mongolia are staging such a drama between the three countries.
Russia wants to sell its natural gas at a high price, and if Europe doesn’t buy it anyway, it will sell it to Asia. Our country, with enough natural gas resources in hand, naturally want to cut the price, after all, this deal is signed for decades, can save as much as possible.
Mongolia, which is caught in the middle, thinks that it can make a billion dollars a year from tolls, but it is afraid of being marginalized.
Originally, Russia’s natural gas is mainly sold to Europe, such as Germany France, these big customers, business has been doing quite smooth.
But since the outbreak of the Russian-Ukrainian conflict, this group of old European customers immediately turned their backs on each other, and have cut orders to cut off purchases. Russia’s Nord Stream pipeline has also been blown up, so the gas can’t be sold.
Seeing the hand of the gold mine into a hot potato, Russia anxious Europe does not buy, sold to Asia is not okay?
So, Russia has set its sights on our country, and plans to send 50 billion cubic meters of natural gas to us every year through the Siberian Power 2 gas pipeline, as a substitute for the gap in the European market.
The question is, what’s the price? Russia has directly offered the European market price, you will buy it at the price I originally sold to Europe. We were so happy to hear that. Are you kidding me? Europe does not buy our turn, but you want to sell high prices? In this way, the price negotiation can not be agreed, directly stuck.
Don’t think that our country is in a hurry to buy Russian gas, in fact, our country has a very sufficient supply of natural gas, there is no shortage of gas at all.
At present, we get 55 billion cubic meters of gas per year through the Central Asian Gas Pipeline, from Turkmenistan Uzbekistan Kazakhstan, a stable and cheap supply.
In addition, we have built a number of liquefied natural gas (LNG) receiving terminals along our coasts, and we can import large quantities of LNG from Qatar, Australia and the United States every year, which is a very rich source of supply.
So, our country said to Russia, if you want to sell it, you can get a discount, otherwise, you can sell it to whoever you want. And we made a direct request for a long-term contract, locking in the price for decades, and a strategic discounted price.
If Russia wants to sell gas to China, it has to build a pipeline through Mongolia. This pipeline will be called Siberian Power 2 and will have a capacity of 50 billion cubic meters of gas per year.
Mongolia’s eyes lit up when they heard about it. They did some calculations and collected 1 billion dollars in tolls every year, which is tens of billions of dollars in a few decades. Mongolia’s economy was already in the doldrums, so this was their chance to turn around.
They didn’t put much enthusiasm into the pipeline, and even kicked the project out of the list of key national projects.
Seeing this situation, we all went straight to Kazakhstan and planned to build a new pipeline that would go directly from Russia through Kazakhstan and then to China, leaving Mongolia aside. Now Mongolia is anxious, in order to facilitate this business, Mongolia’s Prime Minister for several months frequently visit China, is hoping to hurry to sign the construction.
Mongolia is a country rich in resources but in the middle of a geographic gap, and must learn to skillfully balance between China and Russia.
If it can stabilize its position as the god of transit, it will continue to earn lucrative tolls from the project.
But if it fails to manage its relationship with China and Russia and loses this source of toll revenue, that would not be good.
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