Russia and China have moved a step closer to launching one of the most ambitious energy projects in recent memory. The two countries signed a binding agreement to build the Power of Siberia 2 pipeline, a massive project that could shift the balance of global energy flows.
Gazprom CEO Alexei Miller announced that the deal was finalized with China’s state-owned energy giant, China National Petroleum Corporation (CNPC). Gazprom, the world’s largest natural gas producer, controls the biggest gas reserves on the planet, and this project has been in the works since 2020.
The pipeline will run from Russia’s western Siberian reserves, cutting across Mongolia before reaching northern China.
Once completed, it will become one of the largest and most expensive undertakings in the global gas industry.
Miller described it as the “most extensive and capital-intensive project” of its kind.
At its core, the agreement means Russia will send more natural gas eastward, securing China as a long-term customer. With Europe gradually reducing its reliance on Russian gas since the Ukraine war, Beijing has become a critical alternative market.
For China, the deal offers another advantage. President Vladimir Putin said the pipeline would allow the world’s biggest energy consumer to buy gas at prices “lower than Europe”, a competitive edge that strengthens Beijing’s position in global markets.
The signing of this memorandum may look technical, but it signals much more. It ties Russia’s vast energy wealth more closely to China’s growing demand, reshaping not just regional trade, but the geopolitics of energy.
Why Does The Power Of Siberia 2 Pipeline Matter?
The scale of the Power of Siberia 2 project is what makes it so significant. When finished, the pipeline could send an extra 50 billion cubic meters of gas every year from Russia’s Arctic fields in Yamal to China, cutting through Mongolia along the way.
For Beijing, which is the world’s biggest energy consumer, that means more options and less dependence on US liquefied natural gas in the future.
The route, known as Soyuz Vostok, will form the Mongolian stretch of Power of Siberia 2. Together, the system would boost Russia’s export capacity by 50 billion cubic meters annually.
This comes on top of the 38 billion cubic meters already flowing to China through the original Power of Siberia pipeline, which has been in operation since 2019.
Gazprom chief Alexei Miller said the new line could operate for as long as three decades, providing steady supplies over the long term.
The agreement also includes an expansion of the existing pipeline’s output, raising it from 38 to 44 billion cubic meters a year.
For both countries, the numbers speak volumes. China secures a reliable and discounted energy source at a time when demand keeps climbing, while Russia locks in one of the few markets still willing to take its gas in such large quantities.
The Cost Question
While Moscow and Beijing have agreed in principle to build the Power of Siberia 2 pipeline, the fine print is still missing.
Gazprom admitted that key details, most notably the price China will actually pay, are yet to be decided. That uncertainty highlights just how closely China and Russia are pushing ahead with their partnership, despite Western pressure on President Xi Jinping to distance himself from Moscow.
So far, much about the project remains under wraps. The final contracts have not been signed, and several questions remain unanswered. Will China commit to fixed annual volumes, or will it negotiate the flexibility to scale imports up and down? And at what price will Russia be willing to sell?
Gazprom has only said that the gas will be cheaper than what Europe has been paying, but it has not disclosed figures.
Estimates for the pipeline’s total construction cost also vary widely, ranging anywhere from $13.6 billion to as much as $34 billion.
The construction schedule is also unclear. Analysts believe the Russian section of the pipeline could take about three years to complete, but the timeline for the Chinese side has not been set.
There is also the question of who pays for what. Some reports suggest Russia will fund the domestic portion, while China finances its own segment. Yet other accounts say even Beijing’s financial contribution is still undecided.
Pricing remains the thorniest issue. According to energy expert Alexei Gromov, Beijing would prefer rates closer to Russia’s domestic prices, about $120 to $130 per 1,000 cubic meters.
Moscow, however, wants something closer to the terms of Power of Siberia 1, where prices are linked to Asian oil-product benchmarks, roughly $265 to $285.
President Vladimir Putin has insisted that gas for the new pipeline will be priced “on market principles” through a formula, though he offered no specifics.
What is clear is that negotiations will stretch on. Gromov predicted a full contract might only be finalized later in 2025. Until then, the numbers—how much it will cost to build, who will shoulder the expenses, and what China will pay for the gas—remain open questions.
China & Russia’s Calculations
For the Kremlin, the latest announcement marks an important political win. It signals that Russia and China are intent on deepening their partnership, despite earlier disputes over the pipeline’s terms and the fact that trade between the two has not grown as quickly as Moscow once hoped.
The relationship has only grown closer since Western sanctions hit Russia after the invasion of Ukraine. Beijing and Moscow call it a partnership with “no limits”.
China, the world’s largest energy consumer, and Russia, the biggest resource exporter, find in each other both necessity and opportunity. If the Power of Siberia 2 pipeline is completed, Beijing secures a hedge against future geopolitical shocks, while Moscow gains a stable buyer at a time when Europe has largely turned away.
How the Benefits Stack Up
For Russia, the math is blunt. Gas sales to Europe collapsed from 157 billion cubic meters in 2021 to a projected 39 billion in 2025.
Oil has been easier to redirect, shipped to Asia by sea, but natural gas relies heavily on pipelines. Without new infrastructure, exports cannot rise.
The fallout is already visible. Russia’s gas output dropped by 3.2 percent in the first half of 2025, falling to 334.8 billion cubic meters, partly due to the end of gas transit through Ukraine.
The new pipeline is Moscow’s answer to that decline.
Economically, the rewards are smaller than what Russia once earned in Europe. Energy analyst Sergei Vakulenko has estimated that Power of Siberia 2 could generate annual rent of $2.5 to $4.3 billion. That is well below the $20 billion Moscow lost from its European gas trade, but it still represents a vital stream of revenue for the Kremlin.
For Beijing, the payoff is about stability and leverage. Expanding Russian supplies offers a cushion against risks in the Middle East or disruptions linked to worsening ties with the West.
China has no shortage of suppliers; Qatar, Australia, the United States, and Russia were all among its top gas partners in 2025, but Moscow’s willingness to sell at lower prices makes the Russian option especially attractive.
- Shubhangi Palve is a defense and aerospace journalist. Before joining the EurAsian Times, she worked for ET Prime. She has over 15 years of extensive experience in the media industry, spanning print, electronic, and online domains.
- Contact the author at shubhapalve (at) gmail.com
