Russia and China Resume Power of Siberia 2 Talks With Pricing Gap Still Unresolved
Moscow and Beijing sustain high-level energy diplomacy on a project that could redirect 50 bcm of annual gas supply away from global LNG markets, but price terms remain unsettled.
Chinese Vice-President Ding Xuexiang and Russian Deputy Prime Minister Alexander Novak met on September 4 (2026-09-04) for the 23rd session of the Russia-China Energy Cooperation Committee, continuing efforts to advance a pipeline agreement that had stalled for years before a May summit injected new momentum.5
The project at issue is Power of Siberia 2, a 2,600-kilometre pipeline designed to carry 50 billion cubic metres (bcm) of gas annually from Russia's Arctic Yamal fields to China via Mongolia. If built and operating, it would allow China to substitute a substantial volume of seaborne LNG imports with overland Russian supply — a shift that bears directly on JKM, the Asian spot LNG benchmark, which was trading at $26.75/MMBtu on September 18 (2026-09-18).2,1
Vladimir Putin flew to Beijing on Wednesday (2026-05-20) to meet Xi Jinping. The two sides signed a legally binding memorandum to advance construction, and Moscow said a "general understanding" had been reached. Yet both governments acknowledged that key details, including a construction timetable, remained unresolved.4,3
The main sticking point is price. China has sought terms matching Russia's domestic gas rate of around $120–130 per 1,000 cubic metres. Russia wants pricing closer to the existing Power of Siberia 1 contract, which analysts estimate would more than double that figure. The gap was not closed in May, and the September 4 (2026-09-04) committee session produced no reported breakthrough on terms.2,5
Power of Siberia 1 is currently delivering 38 bcm to China each year. Putin and Xi agreed at a prior summit in September 2025 (2025-09) to expand that capacity to 44 bcm annually. The two countries are also jointly constructing a 10-bcm pipeline from Russia's Pacific island of Sakhalin.1
But Russia is not the only pipeline supplier competing for a share of China's gas demand. Three overland lines from Turkmenistan and Uzbekistan, entering China through Xinjiang, already supply more than 40 bcm a year. The Myanmar-China Gas Pipeline, operational since 2013 and designed to carry 12 bcm annually, adds a southern route. China's total pipeline gas imports across all origins reached 59.4 million tonnes in 2025.1
That existing supply base gives Beijing negotiating room that Moscow lacks on the Yamal side. China can absorb or redirect Central Asian gas if Russian terms prove unacceptable; Russia has few comparable alternative buyers for the remote Arctic volumes that Power of Siberia 2 would monetise.1,2
China's 15th five-year plan, released in March 2026, included a commitment to advancing "early-stage" work on Power of Siberia 2. The phrasing is cautious. It signals political intent without committing to a funding decision, and it changes none of the pricing arithmetic.1
Russian energy exports to China have expanded sharply even as the gas pipeline deal sits unresolved. Official customs data showed China's imports of Russian oil jumped 35% year-over-year in the first quarter of 2026, illustrating how far the bilateral energy relationship has shifted even without new gas infrastructure in place.4
The scale of potential LNG displacement is what gives Asian producers and traders reason to track the pricing talks. Fifty bcm of new Russian pipeline capacity, once online, would reduce China's demand for spot and term LNG volumes by a quantity large enough to reprice JKM in a period of otherwise balanced supply. For exporters exposed to the Asian spot market, that is a bearish long-run demand scenario worth pricing across project timelines now.2,1
The next concrete signal is whether the energy cooperation committee can produce a specific pricing framework rather than another broadly worded understanding. Until Moscow and Beijing agree on a number, Power of Siberia 2 remains a project with strong political backing, a signed memorandum, and no construction date.5,2