“Power of Siberia 2”: A strategic step forward in Russia-China energy cooperation

(Baothanhhoa.vn) - The new progress made by Russia and China in the “Power of Siberia 2” gas pipeline project has attracted the attention of international observers. According to Gazprom CEO Alexey Miller, the two sides have signed a “legally binding memorandum of understanding” regarding the construction of “Power of Siberia 2” and the Soyuz Vostok transit branch through Mongolia.

Breakthrough after 3 years of negotiations

Over the past three years, negotiations on the Power of Siberia 2 project have not made any significant breakthroughs, despite several high-level meetings between Russian and Chinese leaders. Many Western media outlets have commented that the main reason is that Beijing is cautious in committing to support large-scale energy projects with Moscow, especially in the context of Russia’s isolation after the conflict in Ukraine. At the same time, the lack of a specific gas supply contract is considered the biggest obstacle to the actual implementation of the project.

However, according to multiple industry sources, negotiations are still taking place quietly, focusing on technical details, routing and commercial terms. The signing of this memorandum of understanding shows that the key points have been resolved, paving the way for the next important negotiation step: signing a commercial gas purchase agreement.

Long-term geostrategic and economic significance

If fully implemented, “Power of Siberia 2” would help Russia successfully redirect gas flows from Western Siberia – a region that previously served mainly the European market – to the Asian market.

This could have three major strategic implications for Russia: First, reducing dependence on the European market, which has been in serious decline since 2022. Second, strengthening Russia’s position in Asia, especially as it seeks new strategic partners in the energy sector. Third, strengthening its partnership with China, not only in trade but also in geopolitical terms.

At the Eastern Economic Forum 2025, President Vladimir Putin stressed that the gas price for the “Power of Siberia 2” will be determined by market mechanisms, based on a formula linked to oil prices, similar to the previous contract between Russia and Europe. The goal is to ensure long-term flexibility, limit unexpected fluctuations, and at the same time create trust in bilateral relations.

According to the memorandum of understanding between Gazprom and its Chinese partners, the Power of Siberia 2 project has a total capacity of 50 billion cubic meters of gas per year for 30 years. The pipeline is expected to be completed in 2031-2032. If we include the two existing projects, Power of Siberia 1 and the Far East pipeline, with capacities of 44 billion and 12 billion cubic meters per year, respectively, the total volume of Russian gas supplied to China could reach 106 billion cubic meters by 2034. Compared to the current export level (about 31 billion cubic meters in 2024), this represents a growth of up to 340%, reflecting a clear shift in Russia's eastward energy policy.

For China, “Power of Siberia 2” will help protect the country’s energy sector from external shocks, while minimizing consumption risks and ensuring long-term energy security.

Observers say one of the most notable lessons from the recent Middle East crisis is the vulnerability of maritime energy supply routes. A single political decision from global power centers could seriously disrupt the energy supply chain, putting the Chinese economy – a net energy importer – at great risk.

In that context, building a transcontinental gas pipeline like “Power of Siberia 2” offers Beijing a reliable alternative, helping to diversify supplies and reduce dependence on maritime routes at risk of disruption.

Questions to be answered

Although the newly signed memorandum is legally binding, it is not enough to guarantee the start of construction. The prerequisite and decisive factor for the financial efficiency of the entire project is the commercial gas supply contract between Gazprom and its Chinese partners.

This contract not only serves as official evidence of China’s commitment, but also serves as a basis for mobilizing investment capital for the project, which spans three countries: Russia, Mongolia and China. This is a vital factor for an infrastructure project with a total investment of tens of billions of USD and a long payback period.

The lack of a clear gas supply contract also causes international investors to continue to wait and question China's true readiness.

One issue that has attracted much attention is the project’s financial structure. Given Russia’s lack of access to Western capital markets, Chinese banks could act as the main lenders to the project, offering interest rates significantly more favorable than Russia’s domestic rates. This could accelerate the project’s progress and create deeper financial ties between the two economies.

However, some experts are still cautious about the price of gas sold to China, because Beijing is known as a tough negotiator, often prioritizing low prices. It is entirely possible that Russia will accept lower prices than the European market, especially when the current goal is not only short-term profits, but also a long-term strategic restructuring of the gas export system.

Hung Anh (Contributor)

Source: https://baothanhhoa.vn/suc-manh-siberia-2-buoc-tien-chien-luoc-trong-hop-tac-nang-luong-nga-trung-260760.htm