finance
Russia and China Reach Understanding on Power of Siberia 2 Pipeline Route
Russian and Chinese officials agreed on the route and construction parameters for a proposed 2,600-kilometre natural gas pipeline from western Siberia through Mongolia to China. The project would carry up to 50 billion cubic metres of gas per year once completed.
May 20, 11:30 AM·1m read1 source
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Russian and Chinese officials reached an understanding on the route and construction of the Power of Siberia 2 pipeline during a summit in Beijing on Wednesday. The proposed 2,600-kilometre pipeline would transport natural gas from western Siberia through Mongolia to China.
It is expected to have an annual capacity of 50 billion cubic metres, nearly matching the former Nord Stream 1 pipeline to Europe.
The pipeline would supply gas originally intended for European markets. Russia lost significant export revenue after European countries reduced imports following the 2022 invasion of Ukraine. For China, the pipeline would provide an alternative to liquefied natural gas shipped through maritime chokepoints such as the Strait of Hormuz and the Strait of Malacca.
Kremlin spokesman Dmitry Peskov stated that agreement exists on the route and construction method, but commercial details remain unresolved. Energy analyst Seb Kennedy said the primary obstacle is price. China seeks terms linked to its domestic benchmarks while Russia seeks higher prices to cover infrastructure costs.
Construction of the first Power of Siberia pipeline began in 2014 after a 2014 agreement, with deliveries starting in 2019 and full capacity reached in 2024. Analysts estimate Power of Siberia 2 could take a decade from construction start to full capacity.
