China and Russia Sign Agreement to Build New Energy Pipeline

Latest Developments

New Gas Pipeline Through Siberia: Alexey Miller, head of Russia’s state-owned energy corporation Gazprom, announced that Moscow and Beijing had reached a “legally binding” agreement to build a new gas pipeline between the Arctic gas fields of Russia’s Yamal Peninsula and northern China as well as a transit pipeline through Mongolia. The announcement came after Russian President Vladimir Putin and his Chinese counterpart, Xi Jinping, met at the Shanghai Cooperation Organization (SCO) summit, resulting in the signing of 22 agreements between the two countries in areas including healthcare, agriculture, nuclear energy, space exploration, and media cooperation. The “Power of Siberia 2” pipeline could transport up to 50 billion cubic meters per year of gas to China, though the two sides have yet to agree on key issues such as price and whether China will have to take the full volume. Miller said Moscow and Beijing also agreed to increase the annual load of the existing Power of Siberia pipeline from 38 to 44 billion cubic meters.
White House Reviewing All Options on Russia: Russia, China, and India touted their growing ties at the SCO summit in reaction to U.S. threats to punish buyers of Russian energy, whose purchases help fund Russia’s ongoing invasion of Ukraine. On September 1, U.S. Treasury Secretary Scott Bessent said that following the summit between President Donald Trump and Putin in Alaska last month, the Russian leader “has done the opposite of following through on what he indicated he wanted to do. As a matter of fact, he has, in a despicable, despicable manner, increased the bombing campaign.” Bessent added that the Trump administration would be examining ways to sanction Russia economically, saying that “all options are on the table.”
Russia Disrupts Navigation of EU Chief’s Plane: The flight crew on a plane carrying European Commission President Ursula von der Leyen was forced to use paper maps to guide their landing in southern Bulgaria on August 31 due to alleged GPS jamming, which an EU spokesperson attributed to “blatant Russian interference.” Von der Leyen, whose plane landed safely at Plovdiv Airport, was on a tour of EU countries bordering Russia during the incident. Russian GPS jamming and spoofing have become a regular occurrence across European countries near Russia since Moscow launched its full-scale invasion of Ukraine.

FDD Expert Response

“Russia and China’s announced deal to build a new natural gas pipeline from Siberia through Mongolia has all the makings of a pipe dream. It looks good on paper, but it’s likely to remain only a line on a map. Russian pipelines are notorious for being over budget and years behind schedule. Power of Siberia 2 looks to be no different. Beijing and Moscow should heed Secretary Scott Bessent’s repeated warnings: energy deals made today can and may be sanctioned tomorrow.” — Peter Doran, Senior Adjunct Fellow

“China’s demand for cheap energy is key to fueling its lumbering economy, particularly as Beijing pivots towards greater high-value industrialization and artificial intelligence as long-term growth engines. The agreement is also yet another indicator that Beijing has little interest in abandoning Moscow over the long term, even if the war in Ukraine is ultimately settled in the coming months.” — Jack Burnham, Research Analyst

“Whether Power of Siberia 2 will come to fruition remains to be seen. Regardless, there’s no denying that the Sino-Russian partnership enhances the threat each country poses to U.S. interests. China has provided critical support for Russia’s war machine, including by buying Russian energy and aiding Russia’s defense industry. Moscow, in turn, is aiding Beijing’s rapid military modernization. This partnership predates the war in Ukraine and will likely persist long after it — a point that should be remembered by those in Washington advocating ill-conceived attempts to split Russia from China.” — John Hardie, Russia Program Deputy Director

“Policymakers should recognize that the Power of Siberia 2 pipeline announcement comes on the heels of deepening China-Russia cooperation — and, critically, just after the first delivery from Russia’s sanctioned Arctic LNG 2 project to China. Beijing’s willingness to further lean into Moscow’s energy sector shows it no longer fears the consequence of U.S. sanctions. Washington must change that calculation.” — Max Meizlish, Senior Research Analyst