Russia and China Seal Deal for Power of Siberia 2 Gas Pipeline

In a significant development reshaping global energy dynamics, Russia and China have signed a legally binding memorandum to construct the Power of Siberia 2 (PS2) gas pipeline. This agreement, announced during a trilateral meeting in Beijing on September 2, 2025, involving Russian President Vladimir Putin, Chinese President Xi Jinping, and Mongolian President Ukhnaagiin Khurelsukh, aims to deliver 50 billion cubic meters (bcm) of natural gas annually from Russia's Yamal fields to China via Mongolia over the next 30 years.

The PS2 pipeline is a proposed 2,600-kilometer infrastructure project intended to transport natural gas from Russia's Yamal Peninsula in West Siberia to China, traversing eastern Mongolia. Gazprom initiated feasibility studies in 2020, aiming to commence deliveries by 2030. Gazprom CEO Alexei Miller has described it as the world’s largest, most ambitious, and most capital-intensive gas project.

In addition to the PS2 agreement, Russia and China have agreed to increase gas deliveries through existing routes. The capacity of the original Power of Siberia pipeline will rise from 38 to 44 bcm per year, and the Far Eastern Route's capacity will increase from 10 to 12 bcm annually. These expansions are set to enhance the energy partnership between the two nations.

During the trilateral meeting, President Xi Jinping emphasized the importance of consolidating political mutual trust, strengthening solidarity and coordination, and enhancing mutual support among China, Russia, and Mongolia. He proposed deepening mutually beneficial cooperation, particularly in cross-border infrastructure and energy projects, and enhancing collaboration within the framework of the Shanghai Cooperation Organization (SCO).

President Putin noted that Russia, China, and Mongolia are friendly neighbors with a long tradition of cooperation. He emphasized the significance of enhancing political mutual trust and expressed Russia's readiness to carry out strategic cooperation with China and Mongolia that is equal, mutually beneficial, and future-oriented.

The agreement to construct the PS2 pipeline signifies a strategic pivot in Russia's energy exports from Europe to Asia, particularly China. This shift is largely in response to reduced European demand due to sanctions following Russia's 2022 invasion of Ukraine. By increasing gas supplies to China, Russia aims to compensate for the loss of European markets and strengthen its economic ties with China. For China, the pipeline enhances energy security by diversifying its gas import sources and reducing reliance on maritime routes. The involvement of Mongolia as a transit country introduces new economic opportunities, including transit fees and potential gas supplies, while also necessitating careful navigation of its relationships with both neighboring powers.

Despite the signing of the memorandum, critical commercial aspects such as pricing and construction timelines remain unresolved. Historically, negotiations between Russia and China over energy projects have been protracted, often due to pricing disagreements. The finalization of these details will be crucial for the project's viability and success.

The construction and operation of the PS2 pipeline are expected to have significant social and societal impacts. The project is likely to create numerous jobs during the construction phase and subsequent operation, benefiting local economies in Russia, Mongolia, and China. However, the pipeline's route through ecologically sensitive areas raises potential environmental issues, including habitat disruption and the risk of gas leaks. For China, the pipeline enhances energy security by providing a stable and diversified source of natural gas, reducing dependence on other suppliers.

The signing of the memorandum for the PS2 pipeline marks a significant development in Eurasian energy cooperation, with far-reaching economic, political, and social implications. As the project progresses, the resolution of outstanding commercial details and the management of environmental and societal impacts will be critical to its success.