Russia and China to Construct Power of Siberia 2 Pipeline

Russia and China have signed a legally binding memorandum to construct the Power of Siberia 2 gas pipeline, a project set to deliver 50 billion cubic meters of natural gas annually from Russia's Yamal region to China via Mongolia over the next 30 years. The agreement was formalized during a trilateral meeting in Beijing attended by Russian President Vladimir Putin, Chinese President Xi Jinping, and Mongolian President Ukhnaagiin Khurelsukh.

In addition to the new pipeline, the two nations agreed to increase gas supplies through the existing Power of Siberia pipeline from 38 to 44 billion cubic meters per year and to boost deliveries via the Far Eastern route from 10 to 12 billion cubic meters annually. These developments signify a deepening energy partnership between Russia and China, especially as Russia seeks to diversify its energy exports amid reduced European demand following the 2022 Ukraine conflict.

The Power of Siberia 2 pipeline, also known as the Altai gas pipeline, has been under discussion since 2006 but faced delays due to disagreements over pricing and competition from other gas sources in the Chinese market. The project is expected to be operational by 2030, traversing Mongolia and providing the country with transit fees and gas supplies.

Gazprom CEO Alexei Miller described the Power of Siberia 2 project as "the largest, most ambitious, and most capital-intensive gas project in the world." Chinese President Xi Jinping and Russian President Vladimir Putin reaffirmed their close ties during the signing ceremony, referring to each other as "old" and "dear" friends.

This agreement signifies a deepening energy partnership between Russia and China, especially as Russia seeks to diversify its energy exports amid reduced European demand following the 2022 Ukraine conflict. The Power of Siberia 2 pipeline is expected to offset Russia's declining energy exports to Europe and provide China with a stable alternative to LNG imports from the U.S., Qatar, and Australia. Experts caution that while the expansion of current infrastructure appears concrete, the Power of Siberia 2 still faces hurdles, including unresolved pricing disputes and geopolitical alignment issues.

The Power of Siberia 2 pipeline project has been under discussion since 2006 but faced delays due to disagreements over pricing and competition from other gas sources in the Chinese market. In 2022, Mongolia's Prime Minister announced that the feasibility study had been completed, with construction expected to commence in 2024.

The agreement also has significant implications for Mongolia, which stands to benefit economically as a transit country for the Power of Siberia 2 pipeline. However, the project also raises environmental concerns due to the construction and operation of a major gas pipeline through diverse ecosystems in Russia, Mongolia, and China.

Overall, the Power of Siberia 2 pipeline agreement marks a significant development in the global energy landscape, reflecting shifting alliances and the strategic importance of energy resources in international relations.