Russia-China Power of Siberia 2 Pipeline Agreed to Partly Replace Europe Gas Market

Russia and China have signed a legally binding memorandum to build the Power of Siberia 2 pipeline, designed to transport 50 billion cubic meters of Russian natural gas annually through Mongolia to China, marking a strategic shift as Russia seeks to replace lost European gas revenues due to sanctions and the Ukraine war. Despite the announcement during a meeting between Presidents Vladimir Putin and Xi Jinping, key details such as gas pricing, financing, and volume commitments remain unresolved, with analysts cautioning that the deal is not yet finalized. The pipeline, one of the largest global energy infrastructure projects with an estimated $13.6 billion investment, symbolizes deepening Russo-Chinese ties in opposition to the United States and its sanctions, although China retains leverage to negotiate favorable terms. Concurrently, China has increased imports of Russian natural gas via sanctioned Arctic LNG 2 tankers, defying U.S. sanctions aimed at curtailing Moscow's war economy, further cementing energy cooperation between the two countries. However, the global energy transition toward renewables and China's cautious approach to pricing and volume suggest uncertainties about the pipeline's future impact and feasibility. This evolving energy partnership underscores broader geopolitical realignments amid ongoing conflict and economic sanctions.