Russia’s strategic pivot to Asian energy markets, necessitated by Western sanctions following its invasion of Ukraine, is facing significant infrastructure hurdles. While Moscow has vigorously pursued a grand vision of redirecting vast gas volumes to China, a critical second pipeline project, Power of Siberia 2, remains stalled. Instead, recent discussions indicate that China is prioritizing increased throughput through the existing Power of Siberia 1 pipeline, underscoring the complexities and challenges in realigning global energy supply chains.
For over five decades, Russia’s West Siberian gas fields were the primary suppliers to Europe, providing up to 180 billion cubic meters (bcm) annually, satisfying as much as 40% of Europe’s gas needs and generating up to $90 billion for Moscow. The imposition of Western sanctions in 2022 severely disrupted these established routes, compelling Russia to seek new, substantial outlets, particularly in Asia. The Power of Siberia 1 pipeline, which began deliveries from East Siberia to China in 2019, represents a foundational component of this eastward shift.
- Russia’s strategic shift to Asian energy markets faces significant infrastructure hurdles.
- The proposed Power of Siberia 2 pipeline to China remains stalled.
- China is prioritizing increased gas flow through the existing Power of Siberia 1 pipeline.
- Western sanctions imposed in 2022 severely disrupted Russia’s traditional gas supplies to Europe.
- The Power of Siberia 1 pipeline is a foundational element of Russia’s eastward energy reorientation.
Stalled Ambitions: The Power of Siberia 2
The proposed Power of Siberia 2 pipeline, a project valued at approximately $13.6 billion, was initially conceived to route gas from West Siberian fields to China, effectively creating competition between European and Chinese markets for Russian supplies. Its strategic importance escalated dramatically after the European Union largely halted Russian gas imports. However, despite over a decade of negotiations, Moscow and Beijing have yet to reach an agreement on critical aspects such as gas pricing and the financing structure for the new pipeline, according to industry sources familiar with the discussions. A breakthrough on this project is not anticipated during the upcoming meeting between Russian and Chinese leaders.
China’s Evolving Energy Landscape and PoS1 Expansion
China’s energy consumption dynamics are complex. Growing domestic gas production and an expanding renewable energy sector have somewhat tempered its overall demand for additional energy imports. Nevertheless, geopolitical considerations, including the desire to diversify supply and mitigate risks associated with maritime routes, make inland pipeline imports from Russia increasingly attractive, as noted by Tatiana Mitrova from Columbia University’s Center on Global Energy Policy. Consequently, instead of a new pipeline, China is reportedly considering boosting its purchases via the existing Power of Siberia 1. Discussions between Gazprom and China National Petroleum Corporation (CNPC) reportedly involve increasing supplies through this pipeline by an additional 6 bcm per year starting from 2031. This expansion could generate an estimated $1.5 billion annually for Gazprom, based on a gas price of $250 per 1,000 cubic meters, according to Reuters calculations. Neither Gazprom nor CNPC responded to requests for comment regarding these developments.
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