Russia-China-Mongolia Power of Siberia 2 Gas Pipeline Agreement Boosts Annual Trade

The Power of Siberia 2 gas pipeline project, recently advanced through a memorandum signed by China, Russia, and Mongolia, aims to transport 50 billion cubic meters of Russian natural gas annually to China via Mongolia, significantly impacting global energy markets and geopolitics. The deal marks a strategic compromise with China accepting the Mongolian route and Russia offering discounted gas prices, which will raise Russia-China annual gas trade to 106 billion cubic meters, accounting for about one-fifth of China's gas demand. This development threatens to complicate U.S. energy diplomacy and exacerbate the global LNG glut, challenging President Donald Trump's energy dominance agenda, as the U.S. faces increased competition in LNG exports. Despite strong political signaling, pricing terms remain unresolved, and China's growing gas imports from Russia may tighten its negotiating leverage over Central Asian suppliers. The project also offers economic benefits for Mongolia through transit fees and job creation, while raising concerns over secondary sanctions and logistical challenges in Russian LNG shipments. The expansion of Russia-China gas ties underscores the need for Canadian LNG developers and governments to adapt amid shifting global energy dynamics and geopolitical risks.