“Power of Siberia-2”: China Has Suspended Negotiations with Russia on a New Gas Pipeline
14 July 21:47
Negotiations with China over the new “Power of Siberia 2” gas pipeline—which have been ongoing for more than 10 years and which the Kremlin hopes will replace the lost European market—have finally reached a dead end.
During Russian dictator Vladimir Putin’s most recent visit to Beijing, when he hoped to finally reach an agreement with Xi Jinping on the gas pipeline, Chinese officials asked the Russian delegation not to raise the issue again until the terms change, The Wall Street Journal reports, citing sources familiar with the negotiations, as reported by "Komersant Ukrainian".
According to the WSJ’s sources, China is demanding that the Kremlin drastically reduce the cost of gas: it is prepared to sign a supply contract only if the price matches the domestic Russian rate. That amounts to about $50 per thousand cubic meters.
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China is currently purchasing gas from Gazprom at significant discounts. This year, it is paying $258.8 per thousand cubic meters—39% less than the Russian company’s other customers in distant foreign markets ($420.2). Next year, according to data from the Ministry of Economic Development, the price of gas for China will drop to $223.9 per thousand cubic meters, with a discount of 34%.
The Russian delegation that traveled with Putin to Beijing in May “hit a brick wall,” according to WSJ sources: China is effectively demanding that Moscow subsidize “Power of Siberia-2.” It wants a price five times lower than the current rate and eight times lower than what Gazprom charges its other customers in distant foreign markets.
In September 2025, following another trip to China, Putin and Gazprom CEO Alexei Miller announced the signing of a “legally binding memorandum” that would allow for the long-awaited construction of the pipeline, designed to transport gas from Western Siberian fields to China. Before the war with Ukraine began, Europe had been purchasing this gas, but since then, supplies to what was once Gazprom’s key foreign market have fallen to their lowest level since the early 1970s.
However, there has been no confirmation of Putin’s statements from the Chinese side. Following his May visit, “Power of Siberia-2” and gas were not mentioned in any of the 42 bilateral documents signed.
It is possible that China will never sign a contract with Gazprom, according to Jörg Wuttke, a partner at the DGA Group in Washington: There is currently enough gas in the world, and China’s consumption of imported gas is expected to peak in the mid-2030s.
“Why would they tie themselves to a pipeline that will take six years to build and then increase their dependence on Russia when they can get gas from any other country?” explains Wuttke.
Alexander Gabuev, director of the Carnegie Russia Eurasia Center, believes that Xi prefers to “string Putin along” until he agrees to whatever terms are offered. “Wait until the economic situation in Russia deteriorates even further, until Russia is truly brought to its knees, so that it will sign off on terms that are favorable to China,” Gabuev says, describing the Chinese approach to the negotiations.
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