Russia issues new update on China gas pipeline

Foreign Ministry spokeswoman Maria Zakharova commented in light of reports that Mongolia did not include Power of Siberia 2 in its national plans for 2028

The Power of Siberia 2 pipeline to supply Russian natural gas to China remains at a high degree of readiness, Russian Foreign Ministry spokeswoman Maria Zakharova said on Wednesday.

The spokeswoman’s comments come after media reports emerged this week claiming Mongolia had excluded the project from its national development plan for 2028, a move that some analysts believe complicates the project’s prospects.

Power of Siberia 2 is expected to allow for up to 50 billion cubic meters (bcm) of natural gas to be delivered annually from Yamal Region in northern Russia to China via Mongolia.

The South China Morning Post reported on Monday that Mongolia, which would cover much of the proposed route for the 2,594km pipeline, had not included the project in its national development plan for 2028.

The outlet cited analysts who have reportedly attributed the hiatus to pricing disagreements between Beijing and Moscow, as well as geopolitical issues and concerns over secondary sanctions from Western countries.

Regarding the question of Mongolia, she said that “if initially the Mongolian partners wanted a limited role of a transit country, then now the possibility of using part of the cheap pipeline gas for the development of their own economy, industry and infrastructure is being considered.” 

Zakharova emphasized that the project will go ahead after China and Russia agree on pricing and volume, adding that negotiations are ongoing between Russian energy giant Gazprom and China National Petroleum Corporation.

Russia currently supplies gas to China via Power of Siberia – a section of the so-called Eastern Route – which is part of a $400 billion, 30-year agreement between Gazprom and CNPC clinched in 2014. Deliveries started in 2019, and the pipeline is expected to reach its full operational capacity of 38 bcm of natural gas annually by 2025.

Russian Deputy Prime Minister Aleksandr Novak said last month that gas exports to China via Power of Siberia could reach 30 bcm already this year.

Gazprom projects that gas supplies to Russia’s leading trade partner will grow further thanks to soaring demand. Once all pipelines are fully operational, the volume of Russian gas supplies to China could reach nearly 100 bcm annually.

Discussions about the Far Eastern route for gas supplies to China are also underway. This route will deliver supplies of Russian natural gas from the shelf off Sakhalin Island to China starting in 2027. Moscow and Beijing sealed an agreement for additional pipeline gas deliveries via the new route in February 2023.