AI-generated image
AsianFin — The latest round of energy diplomacy between Beijing and Moscow underscores China’s willingness to defy Washington’s push to isolate Russia and expand U.S. energy dominance.
Chinese President Xi Jinping, flanked by Russian President Vladimir Putin at a military parade this week marking the 80th anniversary of Japan’s World War II surrender, showcased Beijing’s growing military and diplomatic influence as trade tensions with Washington escalate.
That symbolism was followed by substance on Tuesday when Gazprom, Russia’s state-owned gas giant, announced it had signed a legally binding memorandum with China to move forward with the long-delayed Power of Siberia 2 pipeline. The 2,600-kilometer project, expected to carry as much as 50 billion cubic meters (bcm) of natural gas annually from Russia’s West Siberian reserves to northern China via Mongolia, has been stalled for over a decade amid pricing disputes and questions about demand.
In addition to the new pipeline, both countries agreed to ramp up flows through existing infrastructure. Gazprom CEO Alexei Miller said Beijing and Moscow will increase annual deliveries via the current Power of Siberia pipeline to 44 bcm from 38 bcm. Supplies from Russia’s Sakhalin Island will also rise 20% to 12 bcm a year.
Taken together, the agreements reinforce Moscow’s role as a top gas supplier to China and highlight Beijing’s willingness to lean on Russian energy despite U.S. sanctions and strategic concerns.
Russia supplied about 22% of China’s natural gas imports in 2024, according to the Energy Institute’s Statistical Review of World Energy. With the incremental increases, Russia’s share could surpass 25% in 2025, assuming Chinese demand continues to grow.
If Power of Siberia 2 comes online near the end of the decade, Russia’s share could double, making Moscow by far Beijing’s largest gas supplier. That would run counter to China’s long-standing strategy of diversifying energy sources and reducing import reliance, especially given its heavy investments in liquefied natural gas (LNG) contracts with producers from Qatar to the United States.
Still, Beijing has boosted domestic gas output, increasing production 28% between 2020 and 2024 to 246.4 bcm, according to the Institute for Energy Economics and Financial Analysis. That could give China more flexibility in managing reliance on Russia.
For Russia, the agreements secure a new long-term market at a time when Europe — its largest energy customer for decades — is rapidly unwinding dependence on Russian gas following Moscow’s 2022 invasion of Ukraine.
For China, deepening energy ties with Russia serve multiple purposes. They provide an alternative to U.S. LNG supplies and act as a direct counterweight to efforts by President Donald Trump’s administration to isolate Moscow. The deals also send a pointed diplomatic signal of defiance as Washington and Beijing spar over trade, technology, and security.
The symbolism is not lost: Last week, China imported its first LNG cargo from Russia’s Arctic LNG 2 project, despite sweeping U.S. sanctions targeting the plant. The cargo’s arrival in Beihai just days before Putin’s visit appeared to be a deliberate move.
Major challenges remain for Power of Siberia 2, particularly on pricing. Gazprom has suggested the gas would be cheaper than what European buyers once paid, but Beijing, flush with alternative supply contracts, holds a strong negotiating hand.
Even so, with Xi and Putin both politically invested, analysts say the momentum is hard to reverse.
“This isn’t just about economics — it’s about geopolitics,” said one Beijing-based energy consultant. “China is showing it won’t bow to U.S. pressure, and Russia is securing a lifeline for its energy exports.”
As the global energy order shifts, the deepening Beijing-Moscow partnership may further sharpen tensions between the world’s two largest economies — setting the stage for what could be a new era of energy confrontation.
Explore more exclusive insights at nextfin.ai.
