Russia Plans 50 Bcm Gas Pipeline to China via Mongolia

Russia and China have signed a legally binding memorandum to build the Power of Siberia 2 gas pipeline, which will transport 50 billion cubic meters of natural gas annually from Western Siberia to China via Mongolia. Russian President Vladimir Putin emphasized that the gas price for this pipeline will be market-based, using a formula similar to that applied for supplies to Europe, ensuring mutually beneficial terms without charity on either side. The pipeline is part of Russia's strategic pivot to increase energy exports to China, especially as Europe seeks to reduce its dependence on Russian gas following the 2022 invasion of Ukraine. Additionally, existing pipelines' capacities are set to increase, reinforcing the growing energy interdependence between Russia and China, with China becoming a significant customer accounting for about a quarter of Russian gas exports. While details such as pricing and funding remain to be finalized, the project signals a shift toward an alternative energy market and a new world economic order, although China has been cautious in publicly confirming the agreement. Mongolia, through whose territory the pipeline will pass, is prepared to proceed and may also purchase some of the gas, further integrating regional energy cooperation.