Power of Siberia 2 Talks Stall as China Wields Its Buyer Power
Beijing's delay on the 50 bcm Russian pipeline shows how import leverage is reshaping Eurasian gas diplomacy.
Russia said a general understanding was reached with China on the joint Power of Siberia 2 gas pipeline during Vladimir Putin's summit with Xi Jinping in Beijing, but key details and a timetable for the vast project still needed to be agreed. The 2,600-kilometre system, designed to transport 50 billion cubic metres of gas annually to China via Mongolia from Russia's Arctic Yamal fields, remains anchored in what Beijing's five-year plan explicitly calls "early-stage" work.1,2
Every gas trader watching the Atlantic and Pacific LNG arbitrage has reason to pay attention. China is the world's largest importer of oil and gas, and its willingness to stall a project Moscow desperately needs gives Beijing the upper hand in pricing negotiations that will set the floor for Russian pipeline gas in Asia for decades.1
The delay fits a diplomatic posture that has hardened considerably. Chinese diplomacy has moved toward sanctions and frozen official exchanges with Japan, with little regard for diplomatic niceties, a change rooted in the growth of China's own strength. One analyst at the Carnegie Endowment for International Peace summarised China's approach to international negotiations plainly: "When you are the weaker party, you cannot get a fair deal."4,3
Moscow has reasons to sweat. The existing Power of Siberia 1 delivered 38 bcm from Russia to China last year, and Putin and Xi agreed last September to lift that to 44 bcm per year. But that incremental volume is modest against the 50 bcm that Power of Siberia 2 would add, a near-doubling of Russian pipeline exports to China that would help offset Europe's near-total rejection of Russian piped gas.1
Yet Beijing's 15th five-year plan, released in March, committed only to advancing early-stage work. No binding timeline. In pipeline diplomacy, that language can stretch for years.1
China's alternatives explain the confidence. The country's natural gas imports via pipelines reached 59.4 million tons in 2025, fed by three separate systems from Turkmenistan and Uzbekistan crossing Kazakhstan into Xinjiang and supplying over 40 bcm annually. In the south, the 793-kilometre Myanmar-China pipeline, operational since 2013, was designed to carry 12 bcm per year. Russia and China are also jointly building a separate link with 10 bcm capacity from Sakhalin.1
That web of supply lines means Russia is not indispensable. The more immediate competition, though, comes from seaborne cargoes. JKM, the Asian LNG benchmark, stood at $21.11/MMBtu at Friday's (2026-08-08) close, and at that price Russian pipeline gas remains attractive to Chinese buyers even at a discount. Beijing can hold out on the new pipeline knowing spot LNG fills the near-term gap.1
There is a squeeze building beneath that calculation. China's domestic gas demand keeps climbing, and pipeline imports have grown consistently. If Beijing delays Power of Siberia 2 too long, it risks a mid-decade supply gap that forces larger LNG purchases into a tight market, pushing JKM higher and feeding through into Brent and Newcastle coal prices.1
Traders are not optimistic for whoever blinks first. The bearish weight in cross-sector signals sits at 0.81 out of a 100 percent strength scale, suggesting markets expect Beijing to extract a sharply discounted price for any new pipeline gas, compressing Russian margins further.1
Putin needs the revenue more than Xi needs the gas. Russia's economy is stalling and the pipeline would rescue it. That asymmetry sits at the core of the negotiation, and Beijing is in no rush to resolve it.1
The next signal is whether Mongolia, the transit country, begins preparatory work on its section, or whether Moscow announces another summit without a construction start date. If the latter, the project slips further into the 2030s and the LNG market will keep pricing in China's continued reliance on spot cargoes through the late 2020s.1