On May 9, Russian President Putin said in an interview: "Russia and China are preparing to take a very important step in cooperation in the fields of natural gas and oil."

The "very important step" referred to by Putin most directly and significantly points to the "Power of Siberia 2" natural gas pipeline. This pipeline, which will run from Russia's Yamal Peninsula through Mongolia to China, has a designed annual gas delivery capacity of up to 50 billion cubic meters—equivalent to France's entire annual gas consumption.

Since the framework agreement was signed in 2015, the project has been stalled for years due to price disagreements (Russia's offer around $265 per thousand cubic meters, China's counteroffer around $120 per thousand cubic meters).

Putin’s use of phrases such as "highly consistent" and "very substantive" suggests that both sides have reached a principle-level consensus on core commercial terms. This marks a strategic pricing concession by Russia amid ongoing Western sanctions and the complete contraction of the European energy market.

This substantial consensus is a lifeline for Russia, breaking through Western energy blockades. Russia’s GDP is projected to shrink by about 0.8% in 2026, with Europe’s share in its energy exports dropping from nearly 50% to just around 4%. Putin urgently needs to secure the East—a single market capable of absorbing vast volumes of oil and gas—to stabilize fiscal revenue and sustain its war machine.

For China, this is the keystone of building a land-based energy security corridor. With the Middle East situation destabilized by U.S.-Iran tensions, the passage volume through the Strait of Hormuz has plummeted by over 95%, pushing global oil prices close to $120 per barrel. The land-based pipeline between China and Russia can completely bypass the Malacca Strait and maritime shipping risks, providing China with stable and controllable energy security for its economic development.

The strong partnership in Sino-Russian energy trade enables Russia to break free from Western sanctions—especially the use of local currencies in settlement, delivering a significant blow to petrodollar dominance. Currently, the share of local currency settlements has surged from less than 5% in 2014 to 45% in 2025. Once this new pipeline becomes operational, the scale of direct RMB-RUB settlement will expand dramatically. This directly undermines the foundation of the "petrodollar"—when the world’s largest energy exporter and largest importer bypass dollar transactions, America’s ability to leverage dollar hegemony to extract global wealth will be substantially weakened.

For Europe, it means the complete loss of any possibility of Russian cheap energy returning, forcing long-term reliance on expensive U.S. LNG, further damaging industrial competitiveness. It also signals the failure of sanctions against Russia.

Original source: toutiao.com/article/1864770944536588/

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