Power of Siberia 2

Power of Siberia 2 is a proposed natural gas pipeline that would carry approximately 50 billion cubic metres per year from Siberian fields across Mongolia to China, running roughly 2,600 kilometres. Russia's Gazprom and China's CNPC have been negotiating the project since at least 2015, but talks stalled repeatedly over price: Russia sought European-style pricing benchmarked to oil; China insisted on discounted rates reflecting its alternatives, including Central Asian pipeline gas and expanding LNG import capacity. The impasse persisted through multiple bilateral summits and was repeatedly described as 'nearly finalised' without closing.

The calculus shifted after 2022, as Western sanctions eroded Gazprom's European market. Russia needed new eastward outlets; China retained its leverage precisely because it was the only buyer of scale available. In May 2026 the Kremlin announced an 'understanding on the main parameters' of the deal, a formulation that stopped short of a signed contract and which Chinese state media declined to echo. Analysts noted that 'parameters' agreements between the two countries have previously dissolved into further rounds of negotiation. The financial pressure on Moscow was acute: Russia's oil and gas revenues fell 38% year-on-year in the first four months of 2026, and the Q1 budget deficit already exceeded the government's full-year target.

For European energy security the pipeline matters because its construction would give Russia a durable, high-volume gas route that does not cross Ukraine or Turkey, reducing Moscow's incentive to maintain any residual transit relationship with Europe. For China, Power of Siberia 2 adds supply diversification but at the cost of deepening dependence on a single sanctioned partner. The project sits at the intersection of Russia's fiscal emergency, China's strategic caution, and the broader question of whether Western sanctions can outlast Moscow's ability to find alternative customers.