Gas

Russia and China in Talks on Stalled Power of Siberia 2 Pipeline

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Russia and China plan to revisit discussions on the stalled Power of Siberia 2 gas pipeline. The talks will occur during Chinese President Xi Jinping’s state visit to Russia from May 7 to 10 for Victory Day commemorations.

Russia has been seeking an agreement with China to construct the Power of Siberia 2 pipeline. The pipeline would transport 50 billion cubic metres of natural gas a year from the Yamal region in northern Russia to China via Mongolia.

President Putin of Russia initially proposed the Power of Siberia 2 to Xi in 2022 following Russia’s invasion of Ukraine. The consequence of Russia’s invasion was a steep plunge in the European Union’s gas imports from Russia.

Since Russia’s invasion of Ukraine in February 2022, Russia has heavily leaned on the Chinese market to make up for its lost exports to Europe. In 2021, before the war, Russia exported over 157 billion cubic meters of gas to Europe

Construction of the pipeline was initially scheduled to begin in 2024, but it has been plagued with commercial disputes.

The Power of Siberia 2 is now critical to Russia amid the European Union’s plans to halt all remaining gas imports from Russia by 2027.

The proposed pipeline would strengthen Russia’s ability to export gas to China and other Asian markets.

Russia’s first Power of Siberia pipeline came online in 2019. It achieved its full capacity of 38 bcm per year by the end of 2023.

As the European Union moves away from Russian gas, PoS-2 is part of Moscow’s long-term energy pivot to Asia.

The Power of Siberia 2 Pipeline: Russia’s Pivot to China

The proposed pipeline would bring gas from Russia’s massive Yamal peninsula in western Siberia through Mongolia to China.

The first Power-of-Siberia pipeline spans 3,000 km through Siberia and into China’s northeastern Heilongjiang province.

According to a map by Russia’s Gazprom, the new route would cut through eastern Mongolia and northern China.

Key Specifications

  • Origin: Yamal gas fields, Western Siberia, Russia
  • Route: Yamal Peninsula (Russia) → Mongolia → Northern China
  • Length: 2,600 km
  • Capacity: 50 BCM/year
  • Operator: Gazprom
  • End Market: Northern China, including key industrial hubs

As the European Union moves to halt all gas imports from Russia by 2027, Russia needs alternative buyers for its massive gas reserves. The Power of Siberia 2 helps redirect Russia’s gas exports from Europe to Asia, especially China.

The Power of Siberia 2 will enable China to reduce its reliance on LNG imports from key chokepoints like the Strait of Malacca, which are vulnerable to the US and India’s naval blockade.

Factor Russia’s Strategic Gain China’s Strategic Gain
Market Diversification Redirecting its vast gas reserves from the European Union to Asia, especially China Reduce its reliance on LNG imports from exposed chokepoints like the Strait of Malacca
Geopolitical Leverage Strengthening China-Russia alliance Gain tremendous influence over Russia’s oil and gas exports
Economic Stability Lifeline for Gazprom and state revenue Low-cost, reliable gas supply
Regional Influence Expanding geopolitical influence in Mongolia and Central Asia Securing energy dominance in East Asia

Power of Siberia 1 vs Power of Siberia 2 Pipeline: Comparison

Feature Power of Siberia (PoS-1) Power of Siberia 2 (PoS-2)
Status Operational (since December 2019) In negotiation phase
Route Eastern Russia to Northeastern China (via Heilongjiang) Western Siberia → Mongolia → Northern China
Length ~3,000 km ~2,600 km
Transit Countries None (direct Russia–China pipeline) Mongolia
Planned Capacity 38 billion cubic meters (BCM) per year 50 billion cubic meters (BCM) per year
Source Gas Fields Chayandinskoye & Kovykta fields (East Siberian fields) Yamal Peninsula (Western Siberia)
Customer China National Petroleum Corporation (CNPC) Targeted to CNPC, however, contract yet to be not finalized
Contract Signed Signed in 2014 (30-year agreement) No final supply contract as of May 2025
Strategic Role China’s eastern gas diversification Major redirection of Russian gas exports to Asia as Europe moves to stop all imports by end of 2027
Geopolitical Significance Cemented early Russia–China energy ties Critical to Russia’s pivot to Asia amid US/UK/EU economic sanctions (Russia’s Invasion of Ukraine)

Mongolia’s Role in the Pipeline Route

Mongolia will play a vital transit role in the proposed Power of Siberia 2 gas pipeline. The country will be the critical geographical corridor connecting Russia’s Yamal gas fields to northern China.

Mongolia’s cooperation is essential for the 2,600-kilometre pipeline to become operational.

The Soyuz Vostok pipeline, the Mongolian Power of Siberia 2 segment, will span over 950 kilometres within the country.

Mongolia could earn billions of dollars annually in transit fees once the pipeline becomes operational.

However, Mongolia must balance its ties with Russia and China without compromising its “third neighbour” policy (maintaining ties with the West).

Key Sticking Points in Russia-China Negotiations

The primary sticking point has been price.

China wants Gazprom to sell gas at a price comparable to the domestic price, roughly US$60 per 1000 cubic meters. That’s roughly one-quarter of what China pays under the Power of Siberia 1 agreement, which delivers gas at $260 per 1,000 cubic meters.

Country Russian export price per thousand cubic meters in 2024 (average) (in US dollars)
Domestic pricing $60
European Union $320.3
China $257
Türkiye $320.3
Belarus $127.52
Uzbekistan $160
Kazakhstan $180
Kyrgyzstan $150

Source: OrfOnline

Another issue is that although gas from Russia is the cheapest, China continues to import gas from Turkmenistan in Central Asia through the Central Asia-China pipeline. With the construction of the fourth line of the Central Asia-China pipeline, known as line D, a further 30 BCM of gas to China would be exported, bringing Turkmen gas imports to China to 85 BCM. Also, China imports LNG from Qatar, the UAE, the United States and other suppliers.

Furthermore, China has other concerns, such as Gazprom seeking to control the Mongolian section of the pipeline, which it fears will increase Russia’s influence in Mongolia.

The future of the Power of Siberia 2 pipeline remains uncertain, with negotiations ongoing and several complex issues yet to be resolved by Russia and China.

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