Think Tank: How China Became Asia’s Energy Broker

The Iran war has exposed a quietly built landscape of pipeline deals and liquefied natural gas (LNG) contracts over the past decade: China’s monopoly over Asia’s natural gas supply.

According to Reuters, in just the first quarter of 2026, Chinese companies resold a record 19 LNG shipments—10 bound for South Korea, five for Thailand, and the rest distributed to Japan, India, and the Philippines—an event interpreted as shrewd trading. Indeed, it is. Beijing's procurement cost for Russian pipeline gas is approximately $250 per thousand cubic meters, while spot prices across Asia have surged above $830 per thousand cubic meters. The profit margins are staggering. But the deeper significance of this story goes far beyond quarterly arbitrage gains.

The Iran war has peeled back the curtain on a structural shift that has been brewing for ten years. China is not merely reselling surplus gas; it is building an unprecedented system: a three-tiered supply architecture that positions it as the central hub for natural gas supply across the entire Asia-Pacific region. By purchasing gas at low cost via land routes, securing massive global LNG contracts, and then delivering excess volumes to neighboring countries at any price depending on market conditions or crisis resilience, China is redefining regional energy dynamics.

China’s Expanding Pipeline Network and Eurasian Gas Supply Routes

In 2025, Gazprom delivered 38.8 billion cubic meters (bcm) of gas via the "Power of Siberia-1" (PoS-1) pipeline—exceeding both its contractual maximum and the combined total of all European pipeline exports, including those to Turkey. Five years ago, this would have been front-page news. Today, with the continuous expansion of pipeline infrastructure, such news barely registers.

The Far East route (sometimes referred to as "Power of Siberia-3") is scheduled to begin gas deliveries in 2027. Initial volumes will be modest—around 2 billion cubic meters—but the design target is annual deliveries of 10 to 12 billion cubic meters from offshore gas fields on Sakhalin Island. In September 2025, Gazprom and China National Petroleum Corporation (CNPC) reached an agreement to increase the total gas delivery capacity of PoS-1 and the Far East route from the previously contracted 48 billion cubic meters to 56 billion cubic meters. These are no mere fantasies—the steel structures are already being laid underground.

On the Central Asian side, Turkmenistan now delivers about 40 billion cubic meters annually through three parallel pipelines along the Central Asia–China Gas Pipeline network, making it China’s largest single pipeline gas supplier. CNPC launched the fourth phase of commercial development at the Galkynysh gas field—the world’s second-largest—at the beginning of 2026. Additionally, there is Line D: a fourth pipeline traversing Tajikistan and Kyrgyzstan, expected to add another 30 billion cubic meters of capacity. China has urged Central Asian leaders to accelerate construction of this project. Despite numerous delays during implementation, a key tunnel in Tajikistan has been completed, and current political will appears stronger than at any point in the project’s turbulent history.

If realized, the “Power of Siberia-2” (PoS-2) project could completely transform the entire energy landscape. This planned pipeline would transport 50 billion cubic meters of gas annually from the Yamal Peninsula through Mongolia to China—redirecting gas once destined to heat German homes toward Chinese factories. A binding memorandum was signed in September 2025. More importantly, the PoS-2 pipeline was mentioned in China’s “14th Five-Year Plan,” approved by the National People’s Congress in March 2026—but only in passing, described as “advancing preparatory work.” This is a political signal rather than a commercial commitment. Price remains the core issue: Beijing seeks pricing close to Russia’s domestic subsidized rates, while Gazprom requires higher prices to sustain the project. The Iran war may accelerate progress—when oil tankers cannot pass, land-based supply security becomes paramount—but even under the most optimistic assumptions, gas delivery won’t begin before the early 2030s.

Source: The National Interest

Author: Fedor Dmitriyenko

Time: April 15, Washington Time

Original Article: toutiao.com/article/1862595212978377/

Disclaimer: The views expressed in this article are solely those of the author.