Russia claims top China energy supplier rank while Power of Siberia 2 pricing gap stalls commitment
Moscow and Beijing reached only a general understanding on the 50 bcm pipeline during May talks, leaving the price mismatch unresolved.
Russia's oil and gas supplies to China "firmly rank first" among all supplier countries, President Vladimir Putin said, cementing an energy relationship that has deepened sharply since Moscow's 2022 invasion of Ukraine redirected Russian export flows eastward.6
Putin arrived in Beijing on Wednesday (2026-05-20) for talks with Xi Jinping, with the long-stalled Power of Siberia 2 pipeline high on the agenda. Kremlin foreign policy aide Yuri Ushakov said on Tuesday (2026-05-19) the project "will be discussed in detail." What emerged instead was a "general understanding" — not a binding commercial deal — with key details and a timetable still to be agreed, according to statements following the summit.2,51
The gap is price. China reportedly wants pricing terms for the new pipeline to match Russia's domestic rate of around $120-130 per 1,000 cubic metres, while Moscow is seeking terms closer to those governing Power of Siberia 1, which analysts estimate would more than double that figure. That spread explains why a project first proposed years ago remains uncommitted despite the geopolitical push behind it.2,4
The existing Power of Siberia 1 delivered 38 bcm of gas from Russia to China last year, and Putin and Xi agreed in September to increase its capacity to 44 bcm per year.3,1 The planned Power of Siberia 2 system would span 2,600 kilometres, carrying 50 bcm annually from Russia's Arctic Yamal fields to China via Mongolia. China's 15th five-year plan, released in March, committed only to advancing "early-stage" work on the project, signalling Beijing sees no urgency to lock in Russian volumes at Moscow's asking price.1
Beijing and Moscow declared a "no limits" partnership days before the war began, and Chinese purchases of Russian oil and gas have climbed steadily since. Energy has become the backbone of a relationship that Western policymakers have struggled to counter.6,7
China's pipeline gas import network gives Beijing negotiating room. Imports via pipelines reached 59.4 million tons in 2025, with three lines originating in Turkmenistan and Uzbekistan traversing Kazakhstan before entering Xinjiang, supplying over 40 bcm annually. The 793-kilometre Myanmar-China pipeline, operational since 2013, was designed to carry 12 bcm per year. Russia and China are also jointly constructing a separate pipeline from Sakhalin with 10 bcm of capacity.1
Moscow and Beijing did sign a legally binding memorandum to advance construction during the May (2026-05-20) summit, according to CNBC's reporting, but the commercial terms that would make the project bankable remain open.2
Urals crude traded at $84.85/bbl and Dubai at $88.75/bbl, against ICE Brent crude front-month at $94.97/bbl, a discount structure that keeps Russian barrels competitive in Asian markets even without formal price concessions.6 JKM front-month traded at $24.09/MMBtu on 2026-09-04, up 1.39% on the session, with a contrarian bullish signal of +0.70 confidence flagging tighter Asian supply. A deal at $120-130 per 1,000 cubic metres would significantly undercut spot LNG by that measure; pricing closer to Power of Siberia 1 terms would narrow that advantage considerably.2
Russia needs the export route more than China needs the volumes, particularly with European buyers absent and Urals discounts already compressing Moscow's fiscal revenues. China's diverse pipeline supply base means it can source marginal volumes elsewhere while holding out on terms.1,4
Every year Power of Siberia 2 remains unbuilt keeps Chinese buyers sourcing incremental volumes on the spot market. The pricing negotiation — specifically whether Beijing can pull Moscow toward the $120-130 domestic rate or Moscow can defend Power of Siberia 1 terms — is what will move this project from diplomatic talking point to construction decision.2,1