Russian President Vladimir Putin and Chinese leader Xi Jinping have held high-level discussions in Beijing regarding the long-stalled Power of Siberia 2 natural gas pipeline. The proposed 2,600-kilometer infrastructure project is designed to transport 50 billion cubic meters of gas annually from Russia’s Yamal fields through Mongolia to China. While the two nations have signed a memorandum to advance the project, significant hurdles regarding pricing, financing, and delivery timelines continue to stall the final agreement.

The urgency for the pipeline has intensified as recent global conflicts, particularly the ongoing war involving Iran, have disrupted maritime energy routes. With the closure of the Strait of Hormuz threatening a substantial portion of China’s oil and liquefied natural gas imports, Beijing is facing increased pressure to secure reliable, land-based energy alternatives that bypass vulnerable sea lanes. Despite this, analysts suggest that China remains cautious, balancing its desire for energy security against the risks of over-reliance on a single supplier.

Negotiations have been complicated by divergent economic expectations. China has reportedly pushed for pricing structures similar to Russia’s domestic rates, while Moscow seeks significantly higher valuations, closer to the pricing established for the original Power of Siberia 1 pipeline. Furthermore, the project carries long-term geopolitical implications; while a deal would deepen the strategic alliance between Moscow and Beijing, it would also concentrate Russia’s export dependence on a single market and tether China’s energy infrastructure to Russian-controlled supply lines.

As Russia seeks to offset the collapse of its European gas exports following the 2022 invasion of Ukraine, the expansion of its energy partnership with China has become a central pillar of its economic strategy. Even if a final agreement is reached, experts note that the logistical and financial complexities of such a massive undertaking mean that the project will remain a subject of intense negotiation, reflecting the broader shift in the global energy landscape.