Russia and China sign agreement for Power of Siberia 2 pipeline

3 September 2025

A “legally binding memorandum” has been signed on the construction of the Power of Siberia 2 gas pipeline from Russia to China and the Soyuz-Vostok transit pipeline through Mongolia, the CEO of Russia’s Gazprom company, Alexei Miller, said after talks between the three countries’ leaders in Beijing.

This roughly 2,600-km pipeline, at an estimated cost of around $13.6 billion, will supply 50 billion cubic meters (bcm) of gas per year from Russia with transit through Mongolia. Power of Siberia 2 will carry natural gas from from the Yamal fields in western Siberia that once connected to Germany through the Nord Stream and Yamal-Europe pipelines. Supplies will also be available for sale to Mongolian buyers. Russia is expected to supply gas under the new agreement for 30 years.

Furthermore, an agreement has been reached to increase gas exports through the existing Power of Siberia pipeline from 38 bcm per year to 44 bcm, and to increase supplies of gas from Sakhalin along the Far Eastern Route project from 10 bcm to 12 bcm.

However, the price of future gas supplies, details on the financing of the project, and timelines have not been announced. Asked about the price of the gas, Miller said “we will report on commercial issues separately.”

Asked about the payment currency, Miller said he “can say in what currencies payment is made in the current period of time—50% in rubles and 50% in yuan.” The price of gas for China is objectively lower than for Europe due to the shorter transport distance, he said.

Russia began exporting gas to China through the Power of Siberia pipeline in 2019 under a long-term purchase-sale contract between Gazprom and CNPC. Russia exported 31.12 bcm of gas along the pipeline in 2024 and daily deliveries reached the maximum contractual level, which is 38 bcm in annual terms, on December 1, 2024. Gazprom increased gas exports to China by 28% in the first eight months of 2025.

If the Power of Siberia 2 project moves ahead and is completed, it would have far-reaching impacts on global energy markets. The new pipeline and expansion of existing capacities could reduce China’s need for liquefied natural gas (LNG) by 40 million tons per year, which is half of its LNG imports last year, according to Bloomberg.

For China, this means an alternative to American, Qatari, and Australian LNG. For Russia, the pipeline would open new markets, partially replacing the lower European deliveries following the Ukrainian conflict. For Europe, it would be more challenging to restore the supplies of Russian pipeline gas, forcing several European countries to rely on more costly LNG imports.

Source: Interfax