Power of Siberia 2 agreement reshapes Russia–China gas flows

Power of Siberia 2

Russia and China advanced the Power of Siberia 2 agreement with a binding memorandum. The Power of Siberia 2 agreement covers construction and 30-year gas supply terms. As a result, the Power of Siberia 2 agreement moves from concept to negotiated execution.

Scope, volumes and pricing framework

Gazprom and partners committed to PoS-2 and the Soyuz Vostok route through Mongolia. The line will deliver 50bn m³/yr of gas via Mongolia to China. Terms span 30 years with pricing below historic European export levels. However, currency details were not disclosed. Current PoS-1 payments split 50% roubles and 50% yuan. Parties will now negotiate construction financing and detailed commercial terms.

Strategic and market implications

The project complements the 38bn m³/yr Power of Siberia 1 system. Therefore, China diversifies pipeline supply while increasing long-term baseload volumes. Meanwhile, Russia deepens eastward gas rebalancing after reduced EU sales. Mongolia gains transit revenues and regional infrastructure. The agreement timing at the SCO summit in Tianjin signals high-level alignment. Yet delivery depends on route execution, capital discipline, and demand growth.

The Metalnomist Commentary

PoS-2 materially expands Russia–China pipeline interdependence. Watch capex, pipe steel procurement, and compressor lead times. A lower-than-Europe price points to volume security over margin, with indexation and currency mix the key swing factors.