Negotiations between Russia and China regarding the construction of the Power of Siberia 2 pipeline, a project designed to deliver 50 billion cubic meters of gas annually to China’s northwest, have hit a snag. Despite upcoming meetings between Presidents Putin and Xi, a breakthrough on the $13.6 billion project is deemed unlikely due to ongoing disagreements over pricing and funding.
According to industry sources speaking to Reuters on condition of anonymity, this setback has prompted China to consider a different approach.
Instead of pursuing the new pipeline, China is exploring the option of significantly increasing its gas imports through the existing Power of Siberia 1 pipeline. Currently, this pipeline delivers 38 billion cubic meters of gas per year.
Discussions are underway to increase this figure by 6 billion cubic meters annually, starting in 2031, which could potentially generate an additional $1.5 billion in annual revenue for Russia’s Gazprom, based on current market prices. This increase would require upgrades to China’s domestic gas infrastructure.
PipeChina, the Chinese state-owned infrastructure monopoly, has already initiated a study to expand its network in preparation for receiving the increased gas supply, with construction possibly beginning in the second half of 2026.
This shift in strategy comes as Russia seeks to diversify its energy exports following the loss of European markets due to Western sanctions imposed after the invasion of Ukraine. For decades, Russia relied heavily on European gas exports, generating substantial revenue.
Now, the focus has shifted to Asia, with China presenting a major potential buyer. While China’s growing domestic gas production and renewable energy sector have somewhat reduced its reliance on imports, geopolitical factors, including sanctions on Russia, are making Russian gas a more attractive option.
While the Power of Siberia 2 project isn’t necessarily abandoned, the current focus on increasing flows through the existing pipeline highlights the complexities and challenges involved in large-scale energy infrastructure projects amidst fluctuating geopolitical landscapes and evolving energy strategies.
Russia’s plans also include gas supplies from Sakhalin Island in 2027, further diversifying its Asian energy markets.
