Power of Siberia’s natural gas pipeline facility in Heihe City, Heilongjiang Province, China, Tuesday, March 21, 2023.
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Russian President Vladimir Putin met with Chinese leader Xi Jinping in Beijing on Wednesday, raising the long-stalled natural gas pipeline Power of Siberia 2 as energy supplies are disrupted by the Iran war.
Kremlin foreign policy adviser Yuri Ushakov said on Tuesday that the plan “will be discussed in detail among the leaders.”
The planned 2,600-kilometer pipeline would carry 50 billion cubic meters of gas annually from Russia’s Yamal oil field to China via Mongolia. Moscow and China signed a legally binding memorandum of understanding to proceed with construction in September 2025, but pricing, financing terms and delivery dates remain unresolved.
China reportedly wants price terms for the new pipeline to match Russia’s domestic rates of around $120-130 per 1,000 cubic meters, while Russia wants terms closer to Power of Siberia 1, which analysts expect to be more than double that amount.
China is Moscow’s main buyer of energy, with Russian oil imports rising 35% year-on-year in the first quarter, according to official customs data.
The proposed additional pipeline will complement the existing Power of Siberia 1 system, which supplies China with approximately 38 billion cubic meters of gas per year, and the two countries have agreed to further expand annual production capacity.
joint energy project
At a joint press conference on Wednesday, the Russian president said he was ready to continue supplying China with energy and that “joint renewable energy projects have great potential,” according to comments translated by Reuters.
“Russia and China are actively cooperating in the energy sector. Our country is one of the largest exporters of oil, natural gas, including liquefied gas, and coal to China. Of course, we are ready to continue to ensure the uninterrupted supply of all these fuels to the rapidly growing Chinese market,” Putin said in comments carried by Russia’s state-run TASS news agency.
According to Xinhua news agency, the two leaders earlier signed a joint statement on strengthening the “comprehensive partnership” and advocated “a multipolar world and a new type of international relations.”
Putin said his meeting with Xi was “friendly, warm and constructive” and that bilateral relations were at an “unprecedented level.”
Putin did not mention the Power of Siberia 2 pipeline, but Kremlin spokesman Dmitry Peskov later said Russia and China had “reached an agreement on the main terms of the project.”
However, in comments reported by news agency RIA Novosti, he added that there was no clear deadline for the project and “some subtleties are still to be resolved.”
Key considerations
The war between the United States and Iran, which began in late February, effectively led to the closure of the Strait of Hormuz, disrupting half of China’s oil imports and nearly a third of its LNG supplies.
The Power of Siberia 1 system will supply approximately 38 billion cubic meters of gas to China in 2025, and the two countries have agreed to further expand annual production capacity.
CNBC
While this energy shock creates new incentives for Beijing to consider additional onshore pipelines that would avoid maritime chokepoints altogether, analysts remain skeptical that it will change Beijing’s negotiating calculus.
China has about 1.23 billion barrels of onshore crude oil inventories, enough for about 92 days of refining needs, said Muyu Xu, senior oil analyst at Kpler. Domestic gas production also rose 2.7% in the first four months of the year, with Central Asian pipelines outside the Russian system providing additional supply.
In this pool photo distributed by Russian state agency Sputnik, Russian President Vladimir Putin (left) and Chinese President Xi Jinping walk together during a welcoming ceremony at the Great Hall of the People in Beijing on May 20, 2026.
Alexander Kazakov AFP | Getty Images
Russia’s gas exports to Europe have collapsed since the 2022 invasion of Ukraine, with state-run energy giant Gazprom’s shipments reportedly falling 44% last year, the lowest level in decades.
Michael Ferrer, chief geopolitical strategist, said Power of Siberia 2, given its size, could put Moscow at risk for a single customer, while Beijing would trade Hormuz’s maritime vulnerability for dependence on Russian-controlled energy.
“Agreement will not only demonstrate trust, but also a decision that codependency is safer than alternatives,” Ferrer added. “For the rest of the world, it will make it difficult to repair Sino-Russian relations.”
—CNBC’s Holly Ellyatt contributed reporting to this story.
