Russian President Vladimir Putin said on Friday that the planned Power of Siberia 2 gas pipeline to China was a “mutually beneficial project” and the price of the gas would be based on a market formula similar to the one used for supplies to Europe.

Russia proposed the route years ago, but the plan has gained urgency as it looks to Beijing as a customer to replace Europe, which is seeking to wean itself off Russian energy supplies over Moscow’s 2022 invasion of Ukraine.

Russia and China signed a binding memorandum to build the pipeline during Putin’s visit to China this week, but Russian energy company Gazprom GAZP, which aims to start delivering gas via the pipeline by 2030, said pricing was yet to be agreed.

“This is one of the largest energy projects in the world,” said Putin, speaking at an economic forum in Vladivostok.

He said the price would “be calculated using essentially the same formula as for deliveries to Europe … It is absolutely market-based.”

Russia has lost most of its gas market in Europe since the start of the war in Ukraine.

Mongolian Prime Minister Zandanshatar Gombojav, through whose country the new pipeline will pass, told the same event that Ulaanbaatar was ready to proceed but there were details to be worked out.

Mongolia may buy some of the Russian gas, he said.

Source: Reuters