On 2 September, Russia and China concluded a binding agreement on constructing the Power of Siberia 2 natural gas pipeline. The project is purported to transfer 50 bcm of gas every year from West Siberia to northern China by way of Mongolia.
Long-Term Energy Partnership
During talks in Beijing, the agreement was signed confirming that Gazprom will supply gas to China for 30 years. This would only be after the construction is completed. Alexei Miller, the CEO of Gazprom, said the pricing would be set later after which analysts believed China would get a better deal than Europe.
Another agreement was also signed for increment of deliveries through the existing Power of Siberia pipeline, which currently is around 38 bcm a year and may rise up to 44 bcm.
Strategic Pivot Away from Europe
The project underscores Moscow’s effort to reorient energy exports toward Asia after European Union sanctions and policies cut reliance on Russian gas. EU members plan to end imports of Russian fossil fuels by 2027, while U.S. restrictions on Russian energy remain in place.
Analysts say the pipeline strengthens Beijing’s energy security while offering Russia a stable alternative buyer as European demand collapses.
Impact on Global LNG Market
Industry observers warn the new pipeline could reshape global energy trade. Analysts at SEB, a Swedish investment bank, estimate that potential expansions of Siberian pipeline exports—roughly 58 bcm combined—represent about 10% of current global liquefied natural gas (LNG) volumes.
This shift could reduce long-haul LNG shipments from suppliers such as Qatar, the U.S., and Australia. However, Chinese LNG demand is still expected to continue.
Geopolitical Significance
The formation of this partnership comes at a time when Russia and China enter into wider negotiations for further consolidation of what the two describe as the multipolar global order.
It was pointed out by analysts that while an agreement by memorandum does not mean that the construction will begin immediately, it does send a very strong signal that the two powers have moved towards a tighter relationship. And this comes at a time when changes are occurring in energy and geopolitics.
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