Behind the stalled gas pipeline set to dominate Putin-Xi summit

Russian President Vladimir Putin arrived in Beijing on Wednesday to meet with Chinese leader Xi Jinping, and the Power of Siberia 2 natural gas pipeline, which has long been suspended as the Iran war disrupted energy supplies, was on the agenda.

Kremlin foreign policy deputy Yuri Ushakov said on Tuesday that the project ” discussed in great detail Among the leaders.”

The planned 2,600-kilometer pipeline will carry 50 billion cubic meters of gas annually from Russia’s Yamal fields to China via Mongolia. Moscow and Beijing signed a legally binding memorandum of understanding to advance construction in September 2025, but pricing, financing terms and delivery timelines have yet to be resolved.

China reportedly wants pricing conditions for the new pipeline to be in line with Russia’s domestic oil prices. Around $120-130 per 1,000 cubic metersWhile Moscow is seeking terms closer to Power of Siberia 1, analysts predict it will be more than double that figure.

China has become a major buyer of Moscow’s energy, with oil imports from Russia rising 35% year-on-year in the first quarter. official customs data.

The proposed additional pipeline would complement the existing Power of Siberia 1 system, which supplied about 38 billion cubic meters of gas to China last year, and both countries have agreed to further increase annual capacity.

The US-Iran war, which began in late February, led to the de facto closure of the Strait of Hormuz, disrupting half of China’s oil imports and Almost a third of LNG supply.

While this energy shock has created new incentives for Beijing to consider an additional onshore pipeline that bypasses maritime chokepoints entirely, analysts remain skeptical that this will change Beijing’s negotiating calculus.

According to Kpler senior oil analyst Muyu Xu, China has onshore crude oil stocks of about 1.23 billion barrels; This is enough to meet the refining need for approximately 92 days. Domestic gas production increased by 2.7% in the first four months of the year, as Central Asian pipelines outside the Russian system provided additional supply.

Russia’s gas exports to Europe have collapsed since it invaded Ukraine in 2022; Shipments from state-owned energy giant Gazprom reportedly fell by 44% last year. lowest level in decades.

Michael Feller, chief strategist at Geopolitical Strategy, said that given its scale, Power of Siberia 2 could dangerously expose Moscow to a single customer, while Beijing would trade Hormuz’s maritime vulnerability for dependence on Russian-controlled energy.

“An agreement would signal not only trust but also a decision that interdependence is safer than the alternative,” Feller said. he added. “For the rest of the world, this will make it harder to thaw the China-Russia relationship.”