During the SCO Summit, China and Russia signed another major energy cooperation deal, officially approving the "Siberian Power-2" pipeline project and the "Union-East" transit route through Mongolia. Gazprom, the Russian gas giant, signed a strategic cooperation memorandum with China National Petroleum Corporation (CNPC): over the next 30 years, it will supply 50 billion cubic meters of natural gas annually. The total volume of Sino-Russian natural gas trade will be increased to 106 billion cubic meters per year. Experts estimate that this export will bring Russia more than $27 billion in annual revenue. Full supply could start as early as 2031. Experts added that expanding export capacity not only brings returns but also promotes the gasification of certain regions in Russia, including the southern part of Krasnoyarsk Krai. In the long term, Russia will become a key and reliable supplier of energy needed for China's economic growth.

The World's Largest Natural Gas Project

Alexei Miller, chairman of Gazprom, stated on September 2 that Gazprom signed a legally binding memorandum with CNPC, which includes the construction of the "Siberian Power-2" pipeline and the "Union-East" transit pipeline through Mongolia. The document exchange ceremony was held in the presence of the leaders of China, Russia, and Mongolia.

Miller emphasized: "This will be the largest, most ambitious, and highest-investment project in the global natural gas industry." The new pipeline will supply up to 50 billion cubic meters of natural gas to China annually for 30 years.

The two sides also agreed to increase the export volume of the existing "Siberian Power" from 38 billion to 44 billion cubic meters per year; the "Far East Line" will be increased from 10 billion to 12 billion cubic meters per year. The latter's supply will begin in January 2027. This way, the total scale of the new and expanded contracts may reach 106 billion cubic meters per year.

Miller did not disclose the specific gas price in China, but he said that due to the shorter transportation distance, the price would be "objectively lower than in Europe."

Total Investment of about $1.5 Billion

The pipeline will connect the gas fields of Yamal and Western Siberia with China, passing through Mongolia. Mongolia has approved the route in April 2025. The design capacity is 50 billion cubic meters per year. Previously, due to differences between China and Russia on gas prices, the final contract was delayed. China insisted on a price close to the Russian domestic subsidy price, while Gazprom hoped for a higher export price.

Russian experts pointed out that the expansion of the "Siberian Power" had been planned since the design stage, and the additional investment was not large, mainly involving the expansion of production capacity and the addition of a production line at the Amur gas processing plant. The investment is borne by Gazprom, while China provides financial security under the framework of the long-term contract.

According to Reuters estimates, the cost of the "Siberian Power-2" is approximately $13.6 billion. Dmitry Kasatkin, an expert from the Russian consulting company Kasatkin Consulting, said the project is massive: it is nearly 2,600 kilometers long, including the Mongolian section and five compressor stations. The pipeline cost is about $10-15 billion, plus resource access and infrastructure, the total investment is manageable, but due to the 30-year contract guarantee, it is economically viable.

Alexei Grivache, deputy director of the Russian State Energy Security Fund, said that even at the current gas price to China (260 dollars per thousand cubic meters), the investment can be recouped. Russian experts estimate that China will pay over $27 billion annually for this.

Gas Supply Achieved in 2031-2032

Miller recalled the "Siberian Power" project, saying that it was signed in 2014 and delivered gas in 2019, half a year ahead of schedule. "This shows the efficiency of Sino-Russian cooperation, and Gazprom has fully fulfilled its commitments," he said.

Experts predict that large-scale gas supply from the "Siberian Power-2" will be achieved around 2031–2032. At the same time, this project will also promote the gasification of the southern part of Krasnoyarsk and Krasnoyarsk city (the only million-level city in Russia that has not yet been gasified).

In addition, if the "Eastern Line" expansion is successful, the gasification level in the Russian Far East region (such as Khabarovsk Krai and Primorsky Krai) will significantly improve. It is expected that the demand in this area will grow from 4.3 billion cubic meters in 2021 to 22 billion cubic meters by 2035.

Dashed lines represent the route map of the "Siberian Power-2" pipeline

Impact on China, Russia, and the Global Market

Since 2019, Russia has been supplying gas to China via the "Siberian Power". In 2024, the export volume was 31.12 billion cubic meters; by August of 2025, the supply volume increased by 28% compared to the previous year.

In the coming years, China and Russia will also advance the "Siberian Power-3" (Far East Line) project, which is planned to start supplying gas from 2027, 10 billion cubic meters per year.

Analysts believe:

  • For China, this will enhance energy security, reduce dependence on LNG from the United States and Australia, lower costs, and improve supply efficiency.
  • For Russia, it means securing long-term and stable sales in the rapidly growing Asian market, while promoting the development of its mechanical manufacturing and pipeline industries, and reducing reliance on LNG exports.
  • For the global market, Asian LNG demand will be partially replaced by "pipeline gas" in the early 2030s, thus intensifying regional competition.

Ultimately, these projects will make Russia the most important and reliable energy partner for China's economic development, while China will further increase the proportion of stable pipeline gas, reducing price risks. Both sides also plan to settle part of the contract in their own currencies, reducing dependence on the US dollar.

Original article: https://www.toutiao.com/article/7545653897147286042/

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