Power of Siberia 2 and Russia’s growing dependence on China

Jorge Costa Oliveira

For years, Russia has portrayed its strategic “pivot to Asia” as proof that it can successfully replace European markets with Asian demand. Few projects embody that narrative more than the proposed Power of Siberia 2 gas pipeline, designed to redirect natural gas once destined for Europe toward China. Yet the prolonged uncertainty surrounding the project tells a different story: one of growing Russian dependence and increasing Chinese leverage.

Despite more than a decade of negotiations, the pipeline remains stalled. Moscow continues to describe it as a strategic priority, but Beijing has shown little urgency. The reasons extend far beyond technical or financial obstacles. At its core, the project illustrates the profound shift in the balance of power between the two countries.

China enters the negotiations from a position of strength. It understands that Russia urgently needs alternative export markets following the collapse of its energy relationship with Europe. Beijing therefore sees no reason to accept unfavourable terms.

Pricing has become the most visible sticking point. China has reportedly sought prices close to those paid by Russian domestic consumers, which are heavily subsidised and far below international market rates. Such terms would severely undermine Gazprom’s profitability. Even under the existing Power of Siberia 1 agreement, China already enjoys substantial discounts compared with many of Gazprom’s other international customers.

Nor is price the only issue. China has also sought greater flexibility in long-term purchasing commitments, reducing the commercial guarantees that pipeline suppliers traditionally demand. Once again, the negotiating risk shifts largely onto Russia.

Equally important is China’s long-standing energy strategy. Beijing has consistently avoided excessive reliance on any single supplier. It imports pipeline gas from Central Asia and Myanmar while maintaining an extensive network of liquefied natural gas terminals that receive shipments from Qatar, Australia and many other exporters. Accepting the full capacity of Power of Siberia 2 would significantly increase China’s dependence on Russian gas (90 bcm), something Chinese policymakers have little incentive to encourage.

Time also favours Beijing. European plans to eliminate Russian pipeline gas imports have sharply reduced Moscow’s alternatives, while forecasts suggest Chinese gas demand may peak during the 2030s as renewable energy and nuclear power continue expanding. Simply waiting strengthens China’s bargaining position.

The proposed route crosses Mongolia, creating geopolitical sensitivities for both Beijing and Moscow. Financing poses an even greater obstacle. Western sanctions imposed after Russia’s invasion of Ukraine have severely restricted Gazprom’s access to international capital markets and critical technologies. Russia would welcome substantial Chinese financial support, but Chinese state banks and energy companies remain cautious about exposing themselves to secondary Western sanctions. Their global interests far outweigh the commercial value of a single Russian pipeline.

Stretching roughly 2,600 kilometres from the Yamal gas fields in northwestern Siberia to China, the pipeline would traverse permafrost, remote terrain and regions with minimal infrastructure. Even after a final investment decision, construction would likely require five to six years, followed by several more years before reaching full operating capacity.

In reality, Power of Siberia 2 has become more than an energy project. It has evolved into a symbol of the changing relationship between Russia and China. Moscow increasingly views the pipeline as an economic necessity, while Beijing treats it as one option among many, valuable only if it serves China’s broader strategic interests.

That asymmetry may ultimately determine the project’s fate. By the time Russia is prepared to accept China’s conditions, Beijing may no longer need the pipeline at all.

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