Russia Builds Giant East-bound Pipeline
Moscow is now steering its energy strategy eastward, focusing on a monumental new pipeline project with China. Known as Power of Siberia 2 or Soyuz Vostok, the initiative aims to ship up to 50 billion cubic meters (bcm) of natural gas annually through Mongolia into northern China. This move marks a major shift away from European markets following the fallout from Russia’s invasion of Ukraine and mounting Western sanctions Reuters+1.
Context & Strategic Shift
After Europe slashed Russian gas imports in 2022, Gazprom turned toward Asia to secure a reliable buyer for its vast gas reserves. China’s increasing energy demands and geopolitical distance from the West make it a clear pivot point.
On September 2, during high-level meetings in Beijing that included President Putin and Chinese leadership, Gazprom and CNPC signed a legally binding memorandum of understanding to construct Power of Siberia 2, with delivery aimed by 2030. The project is projected to cost around US $13.6 billion and run approximately 2,600 km through Mongolia ReutersThe Moscow TimesDiscovery AlertCSIS.
Technical and Commercial Details
- The 598-mile (≈962 km) section traversing Mongolia, often referred to as Soyuz Vostok, is a crucial link in the pipeline corridor.
- The pipeline features 1.42-meter (1,420 mm) diameter pipes, and will include multiple compressor stations along the route—essential for maintaining high pressure and throughput.
- This complements the existing Power of Siberia 1 pipeline, which began gas deliveries in 2019 and has a capacity of 38 bcm/year, with plans to raise it to 44 bcm/year soon WikipediaReuters.
Political and Economic Implications
President Putin emphasized that China would benefit from a market-based price formula rather than the high European benchmark—an arrangement described as mutually beneficial, not a concession Reuters+1.
Nevertheless, analysts warn that Beijing holds significant negotiating leverage, given its strong alternatives to Russian gas and diminishing appetite amid decarbonization goals. Pricing, financing and construction timelines remain unresolved—a challenge for Russia whose need for new markets outpaces China’s immediate demand.
The scale of the project also threatens to reshuffle global gas markets, potentially reducing long-term demand for U.S. LNG exporters if China locks in large volumes of cheaper pipeline gas Financial TimesSouth China Morning Post.
Risks and Uncertainties
Despite the headline deal, experts caution that a memorandum does not guarantee full execution. Key red flags include:
- Absence of finalized pricing structure, credit arrangements, or construction timeline.
- The volatility of Russia’s financing capabilities under continued Western sanctions.
- China’s evolving energy mix may weaken its long-term demand for fossil fuel imports RadioFreeEurope/RadioLibertyAtlantic Council.
Still, Gazprom views this as its largest and most capital-intensive venture yet—positioning Power of Siberia 2 as a defining fixture of Russia’s pivot toward Asian energy markets The Moscow TimesCSIS.
