Putin's Failed Gas Deal in Beijing Is Now a European Supply Story

Putin's Failed Gas Deal in Beijing Is Now a European Supply Story The unsigned Power of Siberia 2 pipeline keeps 50 billion cubic metres of Russian gas pointed at Europe, reinforcing the continent's supply status quo. Vladimir Putin arrived in Beijing on Tuesday evening for a two-day state visit, greeted by China's foreign minister Wang Yi and an honour guard. Four days earlier, Donald Trump had left the same city. The choreography was deliberate, analysts said, with Xi Jinping hosting the two most powerful leaders in the world within a single week.^6,7 The summit produced a joint declaration on building a "multipolar world" and 20 signed agreements, according to The Moscow Times. Putin and Xi condemned Washington's Golden Dome missile defence plans and criticised US nuclear policy as "irresponsible," Reuters reported.^5,4 But the one agreement energy traders were watching did not materialise. The Power of Siberia 2 pipeline, which would transport 50 billion cubic metres of Russian natural gas annually from the Yamal Peninsula through Mongolia to northern China, remains unsigned. The BBC's Steve Rosenberg summarised it plainly: Putin enjoyed Xi's welcome but headed home without the pipeline deal.^5,3 That matters because the pipeline would redirect a significant volume of Russian gas away from European markets. Without it, those molecules stay competing for buyers on the continent, keeping ICE Endex TTF front-month prices under more supply pressure than would exist if Russia had an alternative eastward route at scale.³ The asymmetry in the bilateral relationship explains Beijing's leverage. China is Russia's largest trading partner, but Russia accounts for just 4 percent of China's international trade, the BBC reported. Every month the pipeline stays unsigned, China's negotiating position strengthens as Moscow's fiscal need for gas revenue grows.⁸ Analysts say the unpredictability of Trump's foreign policy has pushed Russia and China closer together politically. Xi's decision to host both leaders within days of each other was no coincidence, reflecting Beijing's attempt to position itself as a trusted actor in an increasingly fragmented global order.^7,9 The political alignment, however, is running well ahead of the commercial alignment on energy. CNN reported that Putin's visit was "clearly calibrated" to show closeness, but calibration is not a contract. The gap between ceremony and signed infrastructure is where the trade lives.^9,3 The ripple effect reaches downstream into Central European gas markets. Hungary illustrates the pace of change. Despite Peter Magyar's landslide election victory ending Viktor Orban's 16-year rule and bringing Budapest closer to the EU, analysts told Montel that Hungary may need as long as a decade to wean itself off Russian energy. Confidential long-term contracts and limited alternative infrastructure constrain the transition regardless of political will.^10,1 New economy and energy minister Istvan Kapitany is expected to pursue a gradual shift, with structural constraints outweighing the political change, analysts told Montel. Russian pipeline gas will continue flowing into Central Europe for years.² The security dimension adds a further complication. A UK defence think tank warned that Britain needs a coordinated response with allies to protect energy systems and supply chains from the threat posed by China, which the analyst described as the biggest challenge facing Western energy security.¹¹ For traders, the failed pipeline deal preserves the current structure of global gas flows rather than disrupting it. Russian gas keeps moving west because there is no large-scale alternative route east. The next signal to watch is whether Power of Siberia 2 surfaces again at a future Putin-Xi meeting, or whether it quietly becomes a permanent talking point rather than a real project.^3,5