Avaneesh S Avaneesh S is an intern at NIAS. Currently, he is pursuing his master’s in history at Pondicherry University.

In May 2026,  Russia and China had reached a “general understanding” on the proposed ‘Power of Siberia 2’ gas pipeline, spanning over 2,600 kilometres. It connects the Arctic Yamal gas fields with Shanghai, through Mongolia. Amid Western sanctions and EU’s efforts to move away from Russian energy products, the pipeline represents an effort to regain lost revenue, and Moscow’s resilience against a hostile West. 

What is the background?
First, a brief background on Power of Siberia 1. On 02 December 2019, President Putin and President Xi announced the operation of the Power of Siberia 1 (POS-1), the east line. It supplies 38 billion cubic meters (bcm) of natural gas annually, from Eastern Siberia to China’s Jing-Jin-Ji region and Yangtze River Delta. POS-1 was completed after a 30-year long negotiation process, with construction beginning in 2014. 

Second, the context to Power of Siberia 2. Russia also proposed the ‘Altai pipeline’ to connect Southern Siberia gas fields to Xinjiang, formalized by CNPC and Gazprom in May 2015 to supply 30 bcm annually, initially designated as “Power of Siberia 2 (POS-2).” In June 2018, Russia, Mongolia and China deliberated a “middle-line” route, increasing the proposed supply to 50 bcm annually. By 2022, Russia and China entered advanced negotiations over the middle line, and with Gazprom shifting the POS-2 designation to this route.  On 20 May 2026, Moscow announced that China and Russia, reached a general understanding over the POS-2 pipeline, confirming it to connect Russia’s Arctic Gas fields with Shanghai through Mongolia, which was one of the key developments of the Putin-Xi summit. 

What is the Russian endgame?
First, the redirection of surplus European gas exports to China. Since 2015, Russia was aiming to supply the surplus European gas exports to China, making it the primary reason for Gazprom lobbying for the Altai pipeline. But since Russia’s invasion of Ukraine, Europe has committed to cutting dependency on Russian gas through initiatives such as REPowerEU, and the December 2025 EU resolution to phase out Russian gas by 2027. As such, Russia has the impetus to push further for the construction of POS-2, which would supply gas to China, albeit at a reduced price. 

Second, a geopolitical win against the West. POS-2 represents a big geopolitical win for Russia against Western sanctions, allowing Moscow to demonstrate that its gas exports can be sustained and redirected eastward despite efforts to isolate it economically.

Third, Gazprom's bid for infrastructural monopoly. Besides geopolitical and economic benefits, POS-2 would be the first major infrastructural project of Gazprom, enjoying a near monopoly over gas exports. But it is currently under threat from other Russian companies, including Rosneft and Novatek, which currently lead gas exploration and industry development. Russia is also in need of Chinese technology and investment in gas exports, such as LNG shipping transportation and regasification terminals, amidst the Western sanctions. Other Russian industries under sanction by the West, including its steel plants, can provide a speedy construction timeline for the POS-2 and potentially be operational in their full capacity by the early 2030s.

What is the Chinese perspective?
First, Beijing’s domestic consumption growth and its green transition are key factors. According to Chinese government estimates and the International Energy Agency, China’s gas consumption is set to increase to an estimated 450-650 bcm in 2030s. As such, expanding its gas utilization is a national imperative. Since 2006, China aims to diversify from coal due to severe air pollution and its detrimental effect on China’s green energy strategy. 

Second, POS-2 offers a more economical route for Beijing. The Altai pipeline would have driven higher domestic transportation costs, as gas consumption is mainly centred around the Jing-Jin-Ji region, the most economically productive regions of China. Thereby, China would rather prefer the erstwhile ‘middle-line’ pipeline (POS-2), which would directly connect with the Shaanxi-Beijing system, and then head south to Shanghai. Additionally, upgrading the existing Eastern pipeline network to connect to the POS-2 is more economical than building new pipes. China’s piped gas imports are diverse, with pipelines from Turkmenistan, Uzbekistan, Myanmar, and Russia. Russia’s gas prices are the lowest amongst the four but enjoy around 35-40 per cent of total imports by China. If POS-2 becomes operational, Russian imports to China will rise to 42-45 per cent of total imports by China. 

Third, China’s leverage as a single buyer means it is in no hurry to commit. Negotiations have stalled despite 12 years of talks, due to Beijing's monopsony effect as a single buyer, China refuses to match European prices. Before Ukraine's invasion, POS-2 would have faced two competing buyers. Combined with China's push to reduce non-renewables dependency, POS-2 may not be required and could be rendered useless by 2060s. Thus, Beijing must weigh greater Russian dependence against increased reliance on LNG imports. 

What are the implications for China and Russia?
First, for China, POS-2 becomes a hedge against US-linked energy dependence. The Hormuz crisis has created an unprecedented fuel shortage across the world. Pre-Hormuz, China imported around 86 bcm of LNG in 2025, roughly 50 per cent from Australia and Qatar. In light of this, China will now consider the POS-2 proposal, which aims to accelerate diversification away from US-linked energy supplies. The project brings 50 bcm of piped gas, with lower market prices than previously offered to Europe. This means LNG imports from Qatar and Australia will possibly be filled by POS-2, and China could still be in its timeline to phase out non-renewables. 

Second, for Russia, the pipeline represents resilience. Moscow will not be able to considerably upgrade its fields and productions without Chinese investments, with CNPC and its subsidiaries owning significant stake in Russia’s Arctic gas plants. If the pipeline becomes operational, alongside Chinese investments into Russian gas exploration, will induce an oversupply of gas, most of which, China is set to absorb. Therefore, the pipeline represents Russian resilience, where it is preparing for an isolationist period with the West and for China, it changed from a potentially useless investment to a viable decoupling link from US-allied LNG sources and does not shift its timeline for reducing non-renewables.
 

Bibliography
News Reports and Websites:
1. “Despite Sanctions, Russia’s Arctic LNG 2 Plant is Up and Running,” The Maritime Executive, 02 October 2025.
2. “China's Polar Silk Road: Long Game or Failed Strategy?” The Arctic Institute, 14 November 2023.
3. “Sanction-Proof? Russia's Arctic Ambitions and the China Factor,” The Arctic Institute, 21 November 2024.
4. “U.S. Reactors Still Run on Russian Uranium,” Foreignpolicy, 04 April 2024.
5. “ANALYSIS: China’s LNG imports fell 12% in 2025 despite remaining world’s top buyer,” Independent Commodity Intelligence Services, 30 December 2025.
6. “GIF Inside Story: Power of Siberia 2’s new route makes Russian gas supplies to China more feasible,” Independent Commodity Intelligence Services, 30 April 2026.
7. “What is the Power of Siberia 2 pipeline that Russia, China are planning?” Al Jazeera, 20 May 2026.
8. “What is Russia's Power of Siberia 2 natural gas pipeline to China?” Reuters, 02 September 2025.
9. “Nuclear energy, Taiwan and Trump's 'Golden Dome': key points from the Xi-Putin talks,” Reuters, 20 May 2026.
10. “Kremlin says understanding reached on Power of Siberia 2 gas link to China, but no details yet,” Reuters, 20 May 2026.
11. “Power of Siberia 2: Russia’s Pivot, China’s Leverage, and Global Gas Implications,” Center on Global Energy Policy; Columbia University, 03 September 2025.
12.    “Can China Compensate Russia’s Losses on the European Gas Market?” Carnegie Politika, 01 June 2023.
13.    “What Russia’s First Gas Pipeline to China Reveals About a Planned Second One,” Carnegie Politika, 18 April 2023.

Articles, Journals and Books
1. Zhao et al., “Energy transition in China: It is necessary to increase natural gas utilization,” Energy Reports, Volume 10 (2023), 2439-2447.
2. Vatansever, Adnan and Goldthau, Andreas C., “The political economy of breaking European dependence on Russian gas,” Resources Policy, Volume 109 (2025).
3. Martin Laryš, “Russia’s potential for weaponization of gas supplies after the Re-invasion of Ukraine,” Energy Policy, Volume 191(2024).
4. Liu, Dawei and Xu, Hang., “A rational policy decision or political deal? A multiple streams’ examination of the Russia-China natural gas pipeline,” Energy Policy, Volume 148 (2021)
5. Pye et al., “The global implications of a Russian gas pivot to Asia,” Nat Commun, 2025.
6. Yermakov, Vitaly and Meidan, Michal., “Russia and China Expand Their Gas Deal: Key Implications,” The Oxford Institute for Energy Studies, 2022.
 

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