Russia and China have signed a legally binding memorandum to construct the long-discussed Power of Siberia 2 pipeline, a major project that will channel Russian natural gas through Mongolia into northern China.
The deal, announced in Beijing on Tuesday by Gazprom chief Alexei Miller, marks a significant shift in Moscow’s energy strategy as it pivots further away from Europe following its fallout from the Ukraine war.
The new pipeline, stretching 6,700 kilometers, including 2,700 kilometers across Russian territory, will have an annual capacity of 50 billion cubic meters of gas once completed.
According to Miller, transportation costs will be lower than those for supplies to Europe, making the price of Russian gas more competitive for Chinese buyers.
In addition to the new agreement, Gazprom and the China National Petroleum Corporation signed a supplementary deal to increase deliveries through the existing Power of Siberia pipeline from 38 billion cubic meters per year to 44 billion cubic meters, further deepening energy ties between the two nations.
Miller hailed the Power of Siberia 2 project as “the largest, most extensive and capital-intensive gas project worldwide,” though he withheld precise cost figures.
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Industry estimates suggest that construction will run into tens of billions of dollars, underscoring the scale of investment required.
The contract, Russian media reported, is set for 30 years, highlighting the long-term strategic commitment between Moscow and Beijing.
The announcement came after a trilateral meeting in Beijing involving Russian President Vladimir Putin, Chinese President Xi Jinping, and Mongolian President Ukhnaagiin Khürelsükh, signaling that the project has high-level political backing.
Mongolia’s participation is vital since the pipeline will cut across its territory, providing both transit revenues and geopolitical leverage.
However, despite the breakthrough, the timeline for the pipeline’s construction remains unclear.
Negotiations have been ongoing for over five years, frequently stalling as Moscow and Beijing struggled to agree on pricing.
China, which has pushed for gas at rates closer to domestic Russian prices, has leveraged Moscow’s diminished bargaining power.
Following the loss of much of its European oil and gas market due to sanctions imposed after its 2022 invasion of Ukraine, Russia has had little choice but to offer significant discounts to secure long-term contracts with China.
Analysts note that recent geopolitical developments may have spurred the deal forward.
Reports have stated that the escalating conflict between Israel and Iran—including U.S. strikes on Iranian targets—has heightened Beijing’s concerns about the reliability of Middle Eastern energy supplies.
As the world’s largest energy importer, China views the Power of Siberia 2 project as a way to diversify sources and ensure stable, overland supply routes less vulnerable to maritime disruptions.
For Russia, the agreement represents both an economic lifeline and a geopolitical victory. By cementing energy exports to China, Moscow seeks to offset losses in Europe and demonstrate resilience in the face of Western sanctions.
NAN
