Russia and China have finalized a legally binding memorandum to construct the long-delayed Power of Siberia 2 gas pipeline, designed to transport 50 billion cubic meters of natural gas annually from Russia's Arctic Yamal fields to China via Mongolia for a 30-year period. This agreement marks a significant deepening of their energy partnership, with Russia also committing to increase supplies through existing routes such as the original Power of Siberia pipeline and the upcoming Far Eastern route. The deal aims to provide China with more diversified energy sources while offering Russia vital revenue streams as European markets shrink due to sanctions linked to the Ukraine conflict. Despite the milestone, key commercial elements like pricing, financing, and construction timelines remain under negotiation, with Gazprom indicating the gas price for China will be lower than what Europe currently pays.
This pipeline project reflects a broader strategic pivot by Russia toward Asia, especially China, to offset the loss of European gas customers amid Western efforts to end Russian gas imports. The deal also solidifies China's role as a global power capable of securing energy supplies amidst tensions with the US, as symbolized by high-level discussions during the Shanghai Cooperation Organization summit. Economically, the agreement caps a surge in bilateral trade, which hit record highs recently, though trade growth shows signs of cooling. The pipeline enhances energy security for China and strengthens Russia’s position in the Asian energy market, demonstrating the countries' intent to deepen cooperation despite unresolved commercial terms.
Summary points:
Russia-China signed a binding memorandum for the Power of Siberia 2 pipeline, delivering 50 bcm/year for 30 years through Mongolia.
The deal is part of Russia’s strategic shift from Europe to Asia amid sanctions, and China’s effort to secure diversified energy supplies.
Additional supply increases are planned on existing pipelines, with pricing and construction details still being negotiated.
The agreement underscores broadened economic ties, with record bilateral trade though some recent cooling, and highlights geopolitical positioning at global summits.
