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3w ago

Russia and China Sign Binding Memo for Power of Siberia 2 Gas Pipeline

Key terms remain unresolved, leaving the market impact uncertain.

FILE - The Lakhta Center, which houses the headquarters of the Russian gas monopoly, Gazprom, is seen in St. Petersburg, Russia, on April 27, 2022. (AP Photo/Dmitri Lovetsky, File)
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Overview

  • Gazprom and China National Petroleum Corporation signed what Gazprom called a legally binding memorandum to develop the Power of Siberia 2 and the Soyuz Vostok route through Mongolia.
  • The proposed line is commonly reported at about 50 billion cubic meters per year to northern China, complementing the existing Power of Siberia pipeline from eastern Siberia.
  • Pricing, financing and a construction timeline were not disclosed, so the project has not reached a final investment decision.
  • Analysts say the pipeline could displace roughly one‑third of China’s LNG imports and deliver a structural shock to global seaborne gas trade, pressuring major LNG suppliers.
  • For Russia, the pipeline would replace only part of the gas once sold to Europe, where exports reached up to 180 bcm annually, and experts say China holds strong leverage on terms.