The idiocy of putina's policy really manifests itself here for all to see, although I doubt many russians will.
Firstly, the price of gas flowing through this pipe will be determined by one party: the Chinese. That pipe does not enter a grid or network to which there are multiple competing buyers connected, but a single buyer. Gazprom will take the price, or leave it.
China is building coal, nuclear, hydro and solar energy production at a truly staggering rate. In 15 years its energy production capacities may be truly enormous - enough to export to East Asia even. The whole world is pivoting away from fossil, so it's unlikely that demand growth for natural gas cause any price surprises.
That pipe will take 10 years to build. Putina will certainly be gone by then, but China is wondering what will be left in his place? A basket case economy desperate for foreign currency? A fossil-based economy reliant on gas exports for its livelihood? Neither are really conducive to a strong russian bargaining position, are they. All the while Australian, the Mid-East, Canada, the US, South America are all exporting more and more LNG.
So the question is, russia: how do you price natural gas from a decrepit economy being delivered to a single buyer in 10 years' time? Only once you've agreed that can you build your pipeline.
That's why China won't pay for it. It knows after 10 years, just like NS1 and NS2 it might get blown up and be worthless anyway as they produce their own energy and import from wealthier economies that support their export economy.
The Chinese always have time on their side and russia will learn this. Tell you what vlad, you bald little dimwit, I'll bid you a 50-year contract, pay-on-take only, priced in USD and JKM/HH/TTF less 40%. If you agree to that, I'll finance 25% of your pipeline with interest payments deducted from the gas bill over the 50-year period. Oh, and we have the right to liquify and re-sell the gas as LNG, to Europe if we want. Just to be clear on that.
And just think! With PoS2 operating at full capacity 50bcm/yr, and PoS1 running at it's upgraded 38bcm/yr, you'll have approximately 43% of the capacity you had to Europe just a couple of years ago...
I bow to your financial prowess, oh great wise bald dwarf.
