On August 31, 2025, Russian President Vladimir Putin and Chinese President Xi Jinping stood side by side in Tianjin, China, projecting unity as the world watched. The occasion? A long-awaited announcement: Russia’s state energy giant Gazprom and China National Petroleum Corporation (CNPC) had signed a legally binding memorandum to construct the Power of Siberia 2 pipeline. The project, if realized, would mark a new chapter in the energy relationship between two of the world’s most influential powers—yet beneath the surface, the deal reveals as much about shifting global power as it does about pipelines and profits.
According to the Associated Press, the Power of Siberia 2 pipeline is designed to stretch a staggering 6,700 kilometers (4,163 miles), beginning at the gas-rich Yamal Peninsula in western Siberia, traversing the Siberian forests and Mongolia’s grasslands, and finally reaching China’s bustling coastal megacities. Gazprom CEO Alexei Miller hailed the agreement as “legally binding,” a move meant to signal serious intent after years of on-again, off-again talks. But as with so many high-profile international deals, the devil is in the details—and many of those are still missing.
For Russia, the pipeline represents more than just another infrastructure project. It’s a lifeline. For decades, Russia’s Yamal gas fields supplied Europe, generating substantial revenue. But the geopolitical fallout from the 2022 invasion of Ukraine led to a dramatic pivot: Europe slashed its Russian gas imports from around 150 billion cubic meters in 2021 to less than 10% of that by 2025, with the European Union vowing to end all Russian gas purchases by 2027. In this new reality, Power of Siberia 2 is Moscow’s bid to redirect lost European sales eastward, toward a China that’s both eager for energy and shrewd in negotiation.
Yet, as Bloomberg reports, the pipeline’s capacity—50 billion cubic meters per year—cannot fully replace the 180 billion cubic meters annually that once flowed to Europe. Still, it’s a substantial addition to Russia’s existing gas exports to China, which already include the Power of Siberia 1 pipeline (operational since 2019, now at full capacity of 38 billion cubic meters), and a Far Eastern route expected to come online in 2027. Gazprom and CNPC have agreed to boost combined deliveries via these corridors to 56 billion cubic meters, up from 48 billion, according to Russian state newswire Tass. If Power of Siberia 2 proceeds, Russia could roughly double its pipeline exports to China.
But here’s where things get complicated. Despite the headline-grabbing announcement, China has not yet publicly confirmed the deal’s specifics. Key issues—financing, pricing, and even the precise volume of gas to be sold—remain unresolved. The Carnegie Russia Eurasia Center estimates construction costs for the Russian and Mongolian segments alone at $36 billion. And while Russia touts the project as “the largest, the most massive and capital-intensive gas project in the world,” as Gazprom’s Miller put it, the timeline for completion is anyone’s guess. Power of Siberia 1 took five years from agreement to first gas flow, but the inclusion of Mongolia as a third partner could complicate matters.
Why the hesitation from Beijing? Analysts say China holds all the cards. As Annette Bohr of Chatham House told the AP, “China is definitely in the driver’s seat.” Negotiations have dragged on for years because China has insisted on rock-bottom prices, leveraging its position as the dominant buyer. “At the moment, it’s entirely possible that Beijing is still only ready to commit to part of the pipeline, and at heavily discounted rates, which has in fact been the problem for a number of years,” Bohr explained. In effect, Russia is subsidizing Chinese gas consumption, a dynamic that underscores the shifting balance of power in Eurasian energy.
Alexander Gabuev, director of the Carnegie Russia Eurasia Center, echoed this sentiment, noting that China “has multiple other sources to import gas. So if Russia is ready to provide conditions that satisfy China’s demands, then it’s probably a green light. But without that, it’s just a friendly reminder that Russia needs to accommodate some of Chinese demand.” In other words, China’s leverage is enormous—and it knows it.
Pricing remains a thorny issue. President Putin has said that the gas price will be “market-based” and calculated using a formula different from that used in European contracts. According to BloombergNEF, Russian pipeline gas via Power of Siberia 1 is already among the cheapest gas imports into China, roughly a third less expensive than contracted LNG volumes for the upcoming winter, and less than half the cost of spot LNG imports. The new pipeline, Gazprom claims, will deliver gas even cheaper than what European buyers once paid.
But does China even need another pipeline? That’s a question energy experts are debating. China’s gas demand soared in the last decade but has slowed as the economy matures and renewables and coal take a larger share of the energy mix. As Michal Meidan of the Oxford Institute for Energy Studies told the AP, “It’s not clear that it really does need Power of Siberia 2,” pointing to “huge uncertainty about just how much demand China will have in the 2030s, even from Chinese analysts and Chinese institutions.” If China accelerates its shift to renewables, battery storage, and nuclear power, the demand for gas could plateau—or even decline. For now, gas is “sort of a nice to have (but) it’s not a must-have,” Meidan said.
Still, the pipeline offers China strategic benefits. It provides a long-term, land-based source of cheap gas, reducing reliance on seaborne LNG imports that could be disrupted by maritime tensions or instability in the Middle East. With the United States now the world’s largest LNG exporter, and geopolitical rivalries intensifying, a secure pipeline from Russia gives China a valuable hedge. At the same time, China is wary of becoming too dependent on any one supplier—Russia included—which is why it continues to diversify its energy sources.
For the global gas market, the new pipeline could have ripple effects. If China buys less LNG thanks to increased pipeline flows, that could free up supply for other Asian and European buyers, potentially lowering prices and easing inflation. But it could also undermine the business case for new LNG export projects, especially in the U.S., and extend a looming supply glut into the 2030s. As Bloomberg notes, less appetite from China for LNG could complicate President Donald Trump’s push to expand U.S. energy exports.
So, what’s next? The pipeline, if built, could materially boost Russian gas flows east, offsetting some of the economic pain from lost European markets and supporting Russian industries from steel to construction. But the lack of a fixed-volume contract leaves Russia exposed if China’s demand wanes or if cheaper sources emerge. For now, the Power of Siberia 2 deal is as much about diplomatic theater as it is about energy. It’s a public show of defiance—Russia and China demonstrating they can chart their own path despite Western sanctions and pressure.
Whether Power of Siberia 2 becomes a reality or remains a symbol of shifting alliances, one thing is clear: the global energy chessboard is being rearranged, and the players are negotiating every move with care.