Beijing’s high-stakes energy diplomacy signals China’s willingness to challenge US President Donald Trump’s attempts to isolate Russia and assert US energy dominance.
Chinese President Xi Jinping, seated next to Russian President Vladimir Putin, used the military parade marking the 80th anniversary of Japan’s defeat in World War II to demonstrate Beijing’s military and diplomatic clout, amid growing trade tensions with Washington, Reuters reports.
On September 2, Gazprom announced that China and Russia had signed a legally binding memorandum for the construction of Power of Siberia 2, a 2,600-kilometer gas pipeline between the two countries. The project has struggled to get off the ground after more than a decade of fruitless negotiations.
China will also increase the already large volumes of gas it imports through the existing “Power of Siberia” pipeline. Gazprom CEO Alexei Miller said on Tuesday that the two countries have agreed to increase pipeline supplies from 38 billion cubic meters per year to 44 billion cubic meters.
In addition, both sides have agreed to increase the volume of Russian gas deliveries to China by 20% via a pipeline from Sakhalin Island in the Russian Far East, to 12 billion cubic meters per year.
Overall, this is a further sign of the growing ties between Beijing and Moscow, but above all, it is a signal that China has no intention of giving in to US pressure.
This clearly highlights the Ukrainian conflict’s inclusion in the confrontation with the United States and the West, which has blocked Russian gas and oil imports. This confrontation begins directly in the Pacific and reaches the banks of the Dnieper, in various ways.
Naturally, several major obstacles remain for the new Siberian project. First, the parties have not yet agreed on the price of the gas to be transported through the pipeline. Gazprom’s CEO has indicated that the price will be lower than that paid in the past by European buyers, making it highly advantageous for energy-hungry China.
It is not yet clear whether China will need this additional volume. In recent years, Chinese companies have signed numerous long-term agreements for the supply of liquefied natural gas, including with US producers, for a total of approximately 50 billion cubic meters per year of additional supplies through 2030, according to the Institute for Energy Economics and Financial Analysis.
But stockpiling, becoming the global champion of the green economy while forcing competitors, mired in conflict, to spend heavily on energy, is a “collateral” move by Beijing, a new player in the Ukrainian Risk game, that is diverting resources and attention from the Pacific.
Furthermore, China increased its domestic gas production by 28% between 2020 and 2024, to 246.4 billion cubic meters, according to the IEEFA.
The biggest problem could be strategic. The completion of the new project would consolidate Russia’s position as China’s leading supplier of natural gas, which could pose a problem for Beijing.
Russia supplied about 22% of China’s gas imports in 2024, or about 38 billion cubic meters, including the pipeline and LNG supplies, according to data from the Energy Institute’s Statistical Review of World Energy.
New volumes from the existing pipeline would increase Russia’s share of China’s imports by more than a quarter next year, assuming a surge in the country’s gas demand.
The addition of another 50 billion cubic meters of capacity from the new pipeline, which likely won’t come online before 2030, would double Russia’s share of China’s gas imports.
Beijing has made its move. Now it’s Washington’s turn to roll the dice.
Graziella Giangiulio
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