Vladimir Putin is in Beijing pressing Xi Jinping to finalise the Power of Siberia 2 pipeline — a 2,600-kilometre route that would redirect Russia’s gas exports from Europe to China, structurally weakening the EU’s remaining leverage over Moscow.
The economics are complicated. The geopolitics are not. Vladimir Putin flew to Beijing on Wednesday carrying a single essential objective: to get China to agree to the commercial terms that would allow construction to begin on a pipeline that would permanently reorient Russia’s energy export geography.
The pipeline in question is Power of Siberia 2. At 2,600 kilometres, it would run from Russia’s Yamal gas fields through Mongolia to markets in China, carrying 50 billion cubic metres of gas annually. For scale: the existing Power of Siberia 1 already delivers roughly 38 billion cubic metres to China each year. A second pipeline of comparable capacity would make China the anchor market for Russian gas — not Europe.
For the EU, that shift has a direct strategic implication that goes beyond energy markets. European sanctions on Russia only function as leverage if Russia needs European buyers. A fully operational Power of Siberia 2, locking Beijing into long-term Russian supply contracts, would sharply reduce Moscow’s exposure to further European economic pressure.
Moscow and Beijing signed a legally binding memorandum to advance the pipeline’s construction in September 2025. The announcement was made with considerable ceremony. What it did not resolve — and what remains unresolved today — is the question of price.
China wants to pay approximately $120 to $130 per thousand cubic metres, a figure roughly equivalent to Russia’s domestic gas rate. Beijing has used its domestic price as a reference point in every round of negotiation, treating it as both a floor and a statement of its bargaining position. Russia wants terms closer to the Power of Siberia 1 contract, which delivers gas at a rate that gives Gazprom greater margin. The two sides have not closed the gap.
Infrastructure financing is the other sticking point. A pipeline of this scale requires significant capital commitments before a single cubic metre moves. Who bears those costs, and on what terms, remains an open question — one that Chinese state banks have been in no hurry to answer.
What Moscow is banking on is context. Iran’s role as an energy supplier to Asian markets has been disrupted by conflict in the Middle East, creating supply uncertainty in China that did not exist six months ago. Russian officials have concluded that Beijing’s energy security anxiety, now sharpened by that disruption, will move the Chinese side toward a more generous position on price.
Whether that assessment is correct is far from certain. China has treated its pricing leverage over Russia as a long-term structural asset, building it patiently over years of negotiation since the 2022 invasion dramatically weakened Moscow’s alternatives. Beijing has shown no sign of being in a hurry to give that advantage up, even under changed conditions. Russia’s argument that Iran’s difficulties create urgency for China has yet to be publicly endorsed by Chinese officials.
For Europe, this pipeline is a strategic problem regardless of when or whether it gets built. Every year that Russia and China spend deepening their energy relationship is a year in which EU sanctions instruments lose relevance. The EU ended its dependence on Russian gas after the 2022 invasion — a genuine structural achievement. But the leverage that dependence once gave Europe over Russian behaviour is also gone. Power of Siberia 2, if completed, forecloses the remaining scenario in which Russia might need European buyers badly enough to change its behaviour. Brussels should be watching these negotiations closely. The outcome will shape the limits of European pressure on Moscow for the next decade.
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