Russia and China have finalized a legally binding agreement for the construction of the long-anticipated Power of Siberia 2 gas pipeline during the Shanghai Cooperation Organization (SCO) summit in Tianjin, China, on Tuesday. Announced by Alexei Miller, the CEO of the Russian state-owned gas giant Gazprom, the deal represents a major advancement in energy cooperation between the two countries as both seek to realign trade flows in response to Western sanctions and evolving global energy demands.
The new pipeline will carry natural gas from Russia’s Yamal fields to China via Mongolia, with an expected annual capacity of 50 billion cubic meters for a period of 30 years. The agreement also included provisions to expand gas deliveries through the existing Power of Siberia 1 pipeline, increasing its capacity from 38 to 44 billion cubic meters annually.
While the memorandum confirms the route and general framework for construction, final negotiations will focus on project timelines, pricing mechanisms, and the division of responsibilities for infrastructure development. The agreement was formalized between Gazprom and the China National Petroleum Corporation (CNPC), both of which have been engaged in protracted talks over this project since 2006.
Progress on Power of Siberia 2 has historically been hampered by disagreements over gas pricing and Mongolia’s initial reluctance to act as a transit country. However, following the 2022 “no limits” partnership declaration between Russia and China and the significant reduction of Russian gas exports to Europe, momentum has shifted strongly in favor of the project.
On the sidelines of the summit, Russian President Vladimir Putin held a trilateral meeting with Chinese President Xi Jinping and Mongolian President Ukhnaagiin Khürelsükh. The three leaders announced additional plans to advance the China-Mongolia-Russia Economic Corridor, emphasizing increased trade settlements in local currencies as part of a broader move to reduce reliance on the U.S. dollar and Western-controlled financial systems.