Russia and China have signed a legally binding memorandum to advance the construction of the Power of Siberia 2 pipeline, a project that will significantly expand energy cooperation between the two countries.
The planned pipeline, routed through Mongolia, is expected to deliver 50 billion cubic metres (bcm) of gas annually from Russia’s Yamal Arctic fields to China, according to Reuters.
Gazprom Chief Executive Alexei Miller confirmed that supplies through the existing Power of Siberia line, which runs from eastern Siberia to China, will also increase from 38bcm to 44bcm per year.
While the framework for the project has been agreed, Miller revealed that negotiations on cost-sharing and pricing remain unresolved.
He said tariffs for the new pipeline would be determined separately, while adding that Chinese buyers should expect a more favourable price than European customers due to the pipeline’s distance and terrain challenges.
China has continued to buy Russian energy despite Western sanctions, including liquefied natural gas cargoes from the sanctioned Arctic LNG 2 project.
Analysts suggest this underscores Beijing’s willingness to bypass Western pressure to isolate Moscow, while simultaneously using its negotiating strength to secure significant discounts.
Kirill Babaev, director of the China and Contemporary Asia Institute, said: “The big deal is finally under way.
“Even though we do not know the parameters for the price and volumes, nor the subcontractors of the pipeline, the political negotiations are now over and giving way to commercial tasks, which will definitely bring the result due to a blessing received from the three leaders of Russia, Mongolia and China.”
Talks between Moscow and Beijing also produced 22 new agreements, including a cooperation deal between China National Petroleum Corporation and Gazprom.
The companies did not disclose additional details. Miller described the pipeline, which would connect Russia’s northern gas reserves with Chinese markets, as “the world’s largest and most capital-intensive gas initiative”.
Gazprom has been seeking a deal for the Power of Siberia 2 pipeline for years, with Russia increasingly turning to China after losing a substantial share of its European gas market due to US-led sanctions.
The company’s existing 3,000km Power of Siberia pipeline, agreed in 2014 under a 30-year contract valued at US$400 billion, began operations in 2019 and is expected to reach its full 38bcm annual capacity in 2025.
Beyond the new pipeline, Russia and China agreed to raise gas deliveries from Sakhalin Island from 10bcm to 12bcm per year, further strengthening long-term energy ties between the two countries.
