One of the less obvious consequences of the Iranian-Israeli conflict was the revival of the issue concerning the construction of the Russian-Chinese gas pipeline “Power of Siberia-2.”
Technical Reference
The “Power of Siberia” project consists of three pipeline routes to China:
- Eastern route – “Power of Siberia-1.”
- Western route, Altai trunk gas pipeline – “Power of Siberia-2.”
- Far Eastern route – “Power of Siberia-3.”
The route “Power of Siberia-1” was designed in 2014 and launched in 2019. The project was implemented as part of Russia’s major first “Pivot to the East” in politics, economics, and energy. Its length is 2,159 km, with a maximum capacity of 38 billion cubic meters. It supplies gas from the Kovykta and Chayandinskoye fields to northeastern regions of China through Blagoveshchensk.
The “Power of Siberia-2” route is a joint project of Russia’s Gazprom and China’s CNPC. As of now, it remains in the negotiation stage, and the start of construction has already been postponed several times. The length of the pipeline across Russian territory will be 2,600 km, while the total length is planned at 6,700 km. Its design capacity is 50 billion cubic meters of gas per year.
The project will transit through Mongolia, where a pipeline named “Soyuz Vostok” will be built as part of the “Power of Siberia-2” route. The route will connect the Yamal gas fields to China’s Xinjiang Uyghur Autonomous Region, and further to Shanghai via the “West–East” pipeline system. Construction was expected to begin in 2024, but has been delayed several times. The commissioning of the Mongolian section is currently tentatively scheduled for 2027–2028.
The third part of the route, “Power of Siberia-3,” is a Far Eastern trunk gas pipeline that will run along the route “Sakhalin – Khabarovsk – Vladivostok.” In addition to supplying gas to China, the pipeline is intended to provide the Primorye region of Russia with natural gas from Sakhalin. To achieve this, the plan includes expanding the pipeline’s capacity and building a second gas compressor station. The capacity of “Power of Siberia-3” is expected to be 10 billion cubic meters per year. Its resource base consists of the offshore fields of the “Sakhalin-3” project; however, due to the withdrawal of Western companies from the Sakhalin-2 and Sakhalin-3 projects and the lack of necessary offshore gas extraction technologies, the project has faced difficulties. Nevertheless, commissioning is scheduled for 2027. In 2024, work began on integrating the “Sakhalin – Khabarovsk – Vladivostok” pipeline with the “Power of Siberia” system.
“Soyuz Vostok” Will Pass Through Mongolia
Through this route, raw materials from Western Siberia will be exported to China. The length of the “Soyuz Vostok” trunk gas pipeline will be 962.9 km. The “Power of Siberia-2” pipeline will cross the Russian-Mongolian border near the city of Kyakhta in Buryatia, while the “Soyuz Vostok” pipeline will run from Selenge aimag southeast to Dornogovi aimag, crossing six regions of the country and 22 settlements, with the pipeline laid underground. It is expected that the pipeline will pass through such Mongolian cities as Darkhan, Ulaanbaatar, Choir, and Sainshand, which will make it possible to partially provide gas supply to these localities. The pipeline will then proceed to the Inner Mongolia Autonomous Region in northern China. It is planned that branches will be built to Ulan-Ude and Chita. Previously, alternative routes for laying the pipeline to China through Altai or Kazakhstan were considered.
In 2022, a feasibility study for the route through Mongolia was approved, but even last year there were reports that the gas pipeline project was not included in Mongolia’s official development program until 2028, which raised doubts about its implementation in the near future. However, the Russian and Mongolian authorities continue to actively work on coordinating the project, discussing details of its construction and financing. In addition, according to representatives of the Mongolian government, the environmental assessment of the project will be completed in the third quarter of the current year, which is a key stage before the start of construction work. It is expected that about 12,000 new jobs will be created during construction, which will have a positive impact on the country’s economy.
Implementation Prospects
At present, China’s natural gas needs are being successfully met. However, recently, amid the military conflict, the possibility of blocking the Strait of Hormuz was not ruled out — and about 30 percent of China’s gas imports in the form of LNG from Qatar and the United Arab Emirates pass through this route. Accordingly, such a threat to China’s energy security did not go unnoticed. If previously there were disagreements between Beijing and Moscow regarding pricing and pipeline ownership terms, now it seems the parties are ready to reach a consensus.
The construction of the second line of the “Power of Siberia” pipeline will make natural gas supplies more reliable and diversify the supply structure, reducing dependence on the Middle East and maritime routes in favor of overland pipelines from Russia.
Although current gas needs are covered, China is making a long-term bet on cleaner fuels, particularly natural gas, in an effort to achieve carbon neutrality by 2060. The active development of electric transport in China requires large volumes of gas for power generation. In May 2025, Russia became the third-largest supplier of LNG to China after Australia and Qatar, according to China’s General Administration of Customs, while pipeline gas supplies through “Power of Siberia” increased by 24 percent over five months.
In April, China stopped purchasing American liquefied natural gas (LNG) amid the introduction of “mutual” tariffs. Thus, the resumption of Russian-Chinese cooperation on the “Power of Siberia-2” gas pipeline is once again a relevant project.
Vladimir Putin and Xi Jinping have instructed that the implementation of the “Power of Siberia-2” project be accelerated, and final negotiations are currently underway between companies concerning economic terms. However, revising the route to bypass Mongolia is not being considered.
For Russia, the “Power of Siberia-2” project marks the second stage of the “Pivot to the East,” allowing for the reorientation of gas exports to China and compensating for the loss of the European market, as well as replacing “Nord Stream-2.” With the commissioning of the new pipeline, the share of Russian gas in China’s imports may increase from 5 percent to 20 percent by the early 2030s. In addition, the project will enable the gasification of areas of the Krasnoyarsk Territory and the Irkutsk Region, through which the pipeline is planned to pass, providing an impetus for the development of the Russian Far East.
It is also important to understand that for the Russian side it is vital to find buyers for the excess volumes of natural gas produced at fields that, as a result of sanctions, were left without Western customers. The fact is that it is almost impossible to mothball already developed wells in a way that would allow them to be reopened later. Therefore, Russia will be more flexible on pricing in future negotiations regarding the cost of the supplied raw materials.
Negotiations: A Long History
The negotiation process for the construction of “Power of Siberia-2” already has a long history.
The project for laying a gas pipeline from the fields of Western Siberia to China was being studied as far back as the second half of the 2000s, and at that time it was called “Altai,” but it was later postponed. The parties returned to discussing the pipeline only in 2020 after the launch of the “Power of Siberia-1” route.
In July 2022, the Prime Minister of Mongolia at the time, Luvsannamsrain Oyun-Erdene, announced that he expected construction of the pipeline to begin in 2024.
In March 2023, President Vladimir Putin stated that almost all parameters of the pipeline construction agreement had been agreed upon, but in May it became known that China was delaying negotiations, seeking to secure more favorable terms. As a result, price negotiations dragged on for a year, and by the summer of 2024 it became clear that the Russian side was not satisfied with the price proposed by Beijing.
The parties are considering different pricing options: from linking prices to Brent oil quotations to supplying gas at almost the same cost as that set for Russian industrial consumers. The reduced reliability of Middle Eastern LNG suppliers may motivate China to be more flexible regarding the future price of pipeline gas. However, time works in China’s favor, and Russia is in a state of monopsony, where the almost exclusive buyer of natural gas is China.
At the same time, analysts of the International Energy Agency (IEA), in their annual World Energy Outlook (WEO 2024) report, expressed doubts about the project’s implementation, given “sufficient supply to meet demand in China under all scenarios.” According to the IEA’s base scenario, by 2050 the maximum volume of Russian gas supplies to China may reach only 60 billion cubic meters per year.
Implementation Prospects
Negotiations on “Power of Siberia-2” will continue at the September meeting between Putin and Xi Jinping this year.
It is difficult to assume that the worsening security situation with supplies in the Middle East will give Russia an advantage in negotiations, but at the very least, it has made this issue relevant again. China wants to diversify its supplies altogether, as almost 70 percent of all condensate and crude oil bound for Asian countries passes through the Strait of Hormuz. Of course, the largest consumer is China, and such dependence on narrow choke points or a single supplier makes China’s energy security quite vulnerable.
For China, Russian gas is among the cheapest, making supplies profitable, although they come with political risks. For Russia, China is practically the only buyer and can dictate its purchase price for gas. It should also be noted that the “Power of Siberia” project has more political than economic significance, with financial benefits taking second place, while the primary factor is the political importance of firmly securing the energy “Pivot to the East.”
Tlesh Mamakhatov, PhD in Economics, Leading Research Fellow at the “Russia, China, the World” Center of the Institute of China and Contemporary Asia of the Russian Academy of Sciences, and Senior Research Fellow at the Center for Security Studies of the Russian Academy of Sciences.
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