Russia and China Sign ‘No Limit’ Gas Partnership Agreement
POWER OF SIBERIA 2
Russia has recently attracted attention with its energy partnership with China, agreeing to boost natural gas deliveries via the Power of Siberia 2 pipeline (PoS-2) and the Soyuz Vostok transit pipeline projects through Mongolia. This ambitious project, whose pricing is still being finalised, signifies a strengthened bond between the two nations amid ongoing Western sanctions. The pipeline aims to transport 50 billion cubic meters of gas annually from Russia’s Arctic regions through Mongolia to China. Once completed, this initiative is expected to be one of the largest energy projects globally, reflecting the changing power dynamics and what could become a game-changer for these two global players.
According to the Russian media agency RIA, it was Gazprom’s CEO, Alexey Miller, who revealed that the Russian oil powerhouse has joined forces and signed a “legally binding agreement” with the China National Petroleum Corporation (CNPC) to advance the Power of Siberia 2 initiative.
IMAGE: Proposed Power of Siberia-2 Route (Source: Gazprom)
The story of this project began back in 2006 when Presidents Hu Jintao and Vladimir Putin struck a deal for an exciting venture that would weave through the breathtaking Altai Mountain range, skimming the Russian-Chinese border near Kazakhstan and Mongolia. However, the journey hit a bump in the road in 2009 as conversations stalled over disagreements on the project’s terms. Though there was a brief resurgence of interest in 2014, the project was set aside in 2015 as both nations shifted their focus to the Power of Siberia 1 (PoS-1) pipeline. But with the onset of the Ukraine war in 2022, Russia’s interest in the PoS-2 project sparked back to life as it sought new markets for its gas exports
Oil and gas specialists are hopeful regarding the pipeline’s prospects, estimating that it may allow Russia to export an impressive 50 bcm of gas each year to China. This is particularly true when combined with other current and proposed pipelines, such as the Far Eastern link, which is anticipated to contribute at least 10 billion cubic meters annually. Reports indicate that the flow rates are expected to surpass the initial projections. While it might not completely replace the European market—where Russia used to deliver as much as 155 bcm per year—PoS-2 holds promise. It could significantly mitigate the sharp drop in Russian pipeline gas exports to the EU that occurred between 2021 and 2023, potentially offsetting nearly half of that decline. The pipeline isn’t just about gas exports; it promises a ripple effect across the economy. By boosting demand for Russian steel producers and associated subcontractors, its development is set to inject life into the economic landscape of eastern Russia—an area that holds strategic importance for Moscow.
VIDEO: The Power of Siberia 2: China and Russia’s Game-Changing Energy Alliance
From a geopolitical perspective, PoS-2 stands to transform Russia’s gas export landscape by allowing it to tap into new markets, thereby lessening its reliance on Western economies and reducing its susceptibility to sanctions and geopolitical tensions. According to a comprehensive report from Yunis Sharifli, an independent foreign policy analyst from Azerbaijan, this initiative not only enhances the energy ties between Russia and China but also sends a clear message to Western countries, whose efforts to isolate these two powers have not fully hit the mark. Sharifli also examines China’s geopolitical landscape surrounding the PoS-2 pipeline, which reveals a complex and intricate picture. According to his analysis, as the world’s largest natural gas importer, China’s energy framework is still heavily reliant on coal, which accounts for a staggering 59% of its energy mix. Following coal, petroleum comes in at 20%, while a diverse array of primary electricity sources, such as hydropower, wind, solar, and nuclear, contribute to the mix, alongside a modest 3% from biomass. At present, natural gas makes up only 8.4% of China’s overall energy consumption; However, Sharifli believes there’s a clear aspiration on China’s part to raise this percentage to 15%, underscoring the increasing necessity for stable and competitively priced gas supplies that can support this ambitious goal.
This major China-Russia gas pipeline deal was signed by Xi Jinping and Vladimir Putin at the 25th Shanghai Cooperation Organisation (SCO) Summit in Tianjin, China. The day following the summit, the US$13.6 billion project took centre stage on the agenda of China, Russia, and Mongolia during their trilateral meeting in Beijing. Meanwhile, the Power of Siberia 1 pipeline, launched back in 2019, has become a vital artery, delivering over 100 billion cubic meters of gas from the rich fields of eastern Siberia to energy-hungry China. Gazprom CEO Alexey Miller announced that Moscow and Beijing are now set to boost these supplies even further, paving the way for a stronger energy partnership between the two nations.
The ambitious Power Siberia 2 project seems to have garnered significant political support at the highest levels. However, there are still some important discussions to be had between China and Russia regarding pricing for the pipeline and the sharing of its expenses. What remains clear is that in today’s geopolitical landscape, both countries are eager to explore the lasting advantages that can come from deepening their ties…
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Oliver Fisk reports for Novaya Gazeta Europe…
Russia and China sign deal to build €11.7bn Power of Siberia 2 gas pipeline
Russia and China have signed a legally binding agreement to build a new gas pipeline, The Power of Siberia 2, to deliver gas from Russia to China via Mongolia, the head of Russia’s state-owned energy giant Gazprom told journalists in Beijing on Tuesday.
According to Gazprom CEO Alexey Miller, the pipeline will provide up to 50 billion cubic metres of gas (bcm) to China annually for 30 years, at a lower price than the company currently charges its customers in Europe, Russian state-owned news agency TASS reported on Tuesday.
Gazprom will also increase the export capacity of the existing Power of Siberia pipeline, which currently has a maximum capacity of 38 bcm, by 6 bcm, Miller added.
While Beijing has yet to confirm the signing of the agreement, China’s state-owned Xinhua News Agency reported on Tuesday that Russia and China had signed over 20 cooperation agreements, including some related to energy, according to Bloomberg.
The signing of the deal marks an apparent end to almost two decades of negotiations between Beijing and Moscow, with talks over the infrastructure project frequently stalling due to disagreements over gas pricing and the financial terms of the pipeline’s construction.
In late June, The Wall Street Journal reported that Beijing’s interest in the Power of Siberia 2 project had increased in the wake of the Iran-Israel war, due to concerns over the reliability of energy supplies from the Middle East.
Still, a breakthrough on the €11.7-billion pipeline had not been expected during Vladimir Putin’s three-day visit to China for the Shanghai Cooperation Organisation, with China having previously preferred to purchase more Russian gas via existing pipelines instead, Reuters reported on Friday.
First proposed in 2006, the Power of Siberia 2 project was designed by Gazprom to connect Russia’s West Siberian and East Siberian gas fields, and to generate competition between China and Europe over Russia’s West Siberian gas supplies.
After the EU halted most of Russian gas imports in 2022 in the aftermath of Russia’s invasion of Ukraine, the project — and the broader idea of redirecting its gas exports from Europe to Asia — became a renewed priority for Moscow.
Gas deliveries from Russia to Europe and Türkiye, which stood at over 150 bcm prior to 2022, are expected to drop to 40 bcm in 2025, according to estimates released by BCS, a Russian financial services company.
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