Power of Siberia 2: A New Era in Russia-China Energy Relations

On September 2, 2025, China, Russia, and Mongolia signed a legally binding memorandum of understanding (MOU) to construct the Power of Siberia 2 natural gas pipeline. This project aims to transport 50 billion cubic meters of Russian natural gas to China annually via Mongolia, significantly altering the geopolitical landscape and energy markets. The agreement marks a compromise between China and Russia, with China accepting the Mongolian route and Russia offering discounted gas prices. This deal is expected to increase total annual Russia-China gas trade to 106 billion cubic meters, approximately one-fifth of China's current gas demand.

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The Power of Siberia 2 pipeline is anticipated to provide Mongolia with economic benefits, including transit fees, job creation, and enhanced geopolitical stature. Analysts suggest that the project could reshape the Eurasian energy map, positioning Russia as China's most crucial energy supplier by the time it becomes operational around 2031-2032. However, potential risks remain, including Western influence and Mongolia's "Third Neighbor" policy, which seeks to diversify its international relationships beyond China and Russia.

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The backdrop of this agreement is the ongoing conflict in Ukraine, which has led to a significant decline in Russian gas exports to Europe. Following the invasion, European imports of Russian gas plummeted from 150 billion cubic meters in 2021 to 52 billion in 2022. This shift has prompted Russia to pivot its energy exports eastward, primarily towards China. Some Western analysts express concern that the Power of Siberia 2 deal could undermine efforts to contain Russia's actions in Ukraine, potentially prolonging the conflict by sustaining the Russian economy.

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Chinese Foreign Ministry spokesperson Guo Jiakun emphasized that the cooperation between China and Russia in energy is based on mutual respect and benefit. Gazprom CEO Alexei Miller confirmed that separate commercial arrangements were also established to expand existing gas deliveries. However, the Chinese government has refrained from providing detailed commentary on the deal, leading some analysts to speculate that this may be a strategic move to avoid provoking Western sanctions.

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Critics argue that the pipeline deal could further entrench Russia's economic reliance on China, potentially limiting Moscow's strategic autonomy. Some observers believe that the agreement reflects China's growing influence over Russia, with Xi Jinping emerging as a key player in shaping the bilateral relationship. Additionally, there are concerns that the deal may provoke a stronger response from Western nations, including potential sanctions against Chinese firms involved in supporting Russia.

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As the Power of Siberia 2 project progresses, it will be crucial to monitor the reactions from Western governments, particularly in light of President Donald Trump's recent calls for NATO countries to halt Russian oil purchases and impose tariffs on China. The geopolitical dynamics surrounding this pipeline will likely evolve, influencing energy security and international relations in the region.

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• “The biggest obstacles in the Power of Siberia 2 negotiations were the route selection and price agreement,” — Li Lifan, Director, Shanghai Cooperation Organization Research Centre

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• “If the gas becomes cheap enough, then using the Mongolian route makes economic sense.” — Hebei-based energy columnist

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• “China and Russia carry out practical cooperation in various areas, including energy, under the principles of mutual respect and mutual benefit.” — Guo Jiakun, Chinese Foreign Ministry Spokesperson

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• “Any further natural gas tie-in risks prolonging the war in Ukraine by sustaining Russia’s economy and bolstering Putin politically.” — Joseph Webster and Landon Derentz, Atlantic Council’s Global Energy Center

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