Putin-Xi summit yields no Power of Siberia 2 deal as pricing deadlock persists
Moscow and Beijing left their May summit with a general understanding but no binding agreement on the 50 bcm/year pipeline Moscow needs to replace lost European revenues.
Russia and China failed to sign a binding agreement on the Power of Siberia 2 pipeline during Vladimir Putin's summit with Xi Jinping in Beijing on Wednesday (2026-05-20), the Kremlin told state media. The Kremlin's spokesman, Dmitry Peskov, confirmed that key details and a timetable remain open — leaving the project in the same holding pattern it has occupied for years.2,4
The pipeline matters to Moscow in direct proportion to what Russia lost in Europe. The 2,600-kilometre route would carry 50 billion cubic metres per year from Russia's Arctic Yamal fields across Mongolia into China — nearly as large as Nord Stream 1, the Baltic route to Germany with a 55 bcm design capacity that was sabotaged in 2022 and is now defunct.5,1
There is no commercial agreement because the two sides remain far apart on price. China wants terms closer to its domestic rate of around $120-130 per 1,000 cubic metres, according to summit reports. Moscow is seeking pricing nearer to Power of Siberia 1, which analysts estimate would more than double that figure.3
Russia's urgency is readable from the numbers. The existing Power of Siberia 1 delivered 38 billion cubic metres to China last year, and the two leaders agreed in September to expand that line's capacity to 44 bcm per year. Even at the higher ceiling, Russia's Yamal fields still hold volumes that once flowed west to European buyers at significantly better netback prices. The pipeline would carry gas from fields that used to serve Europe, to where exports have collapsed since the 2022 invasion.1,2
China is not under comparable pressure. Its 15th five-year plan, released in March, committed only to advancing "early-stage" work on Power of Siberia 2. Beijing already draws over 40 bcm per year from three pipelines originating in Turkmenistan and Uzbekistan, transiting Kazakhstan into Xinjiang. A further 12 bcm comes via the Myanmar-China pipeline, operational since 2013. Russia and China are also jointly building a separate 10 bcm pipeline from Russia's Pacific island of Sakhalin.1
China's total pipeline gas imports reached 59.4 million tonnes in 2025, and Beijing is adding supply options faster than demand growth can absorb them.1 That arithmetic gives China's negotiators little reason to concede on price.
The pricing gap reflects misaligned economics on both sides. Russia needs this outlet to be commercially viable, replacing European revenues. For China, the deal only makes sense if it undercuts existing Turkmen supply or spot Asian LNG. Platts JKM LNG front-month was trading at $20.98/MMBtu as of Monday (2026-07-20) — equivalent to roughly $145 per 1,000 cubic metres at standard conversion. With spot LNG at that level, China's stated demand of $120-130 sits below current spot, which reduces any incentive to lock in long-term pipeline supply at a premium.3
Russia has framed Wednesday's (2026-05-20) outcome as progress, but a "general understanding" is a long way from the binding memorandum that would trigger construction financing and engineering commitments. Analysts said significant hurdles remain before the project can become a reality, not least the political complexity of routing a major Russian energy artery through Mongolia.5
ICE Endex TTF front-month sat at €57.51/MWh as of Sunday (2026-07-19). At current European gas prices, Russia's incentive to lock in an Asian alternative is real but not acute enough to force concessions on pricing. The risk that shifts the calculation is a supply disruption hitting Europe before Moscow secures its Chinese outlet — that scenario would narrow Moscow's window to negotiate from any position of strength, while leaving Yamal volumes without a market.
For now, China holds the stronger hand, and the Kremlin has a general understanding to show for the summit but nothing that moves steel.2,4