The agreement between Russia and China this week to build a massive new gas pipeline isn’t just another trade deal: It’s a geopolitical chess move that may leave China the biggest beneficiary of the Ukraine war, Russia with a new customer, and US energy companies with more LNG export terminals than they know what to do with.
When Russian President Vladimir Putin and US President Donald Trump met in Alaska last month, it looked like a chance for Putin to cajole his way back into the Western energy markets he has been shut out of since the 2022 invasion of Ukraine. Instead, it seems he had another trick up his sleeve: Signing on to build the Power of Siberia 2 pipeline showed that he has more confidence in Russia’s long-term relationship with China, and that the two countries, as Columbia University researchers wrote on Wednesday, “are moving to challenge US LNG dominance.”
The deal is far from concluded; the essential issue of gas pricing still hasn’t been resolved, and has for years been the issue holding the long-discussed agreement up. Historically, Moscow has been reluctant to offer substantial gas discounts to foreign buyers (it made exceptions for ex-Soviet republics, one reason for lingering animosity toward Kyiv). In the case of China, it may have little choice but to accept lower profits in return for a gas buyer to replace Europe (the two countries also plan to collaborate on nuclear power). China had already suspended LNG imports from the US anyway, for now. But a big new Asia-bound pipeline from Russia would give Beijing enormous leverage in future LNG negotiations, and increase the entire region’s access to piped gas — the last things US exporters want.
Chinese officials were more vague than Putin about what exactly has been agreed to, leaving even more doubt about whether the pipeline will actually happen, promising only to “actively promote their cross-border infrastructure and energy projects” with Russia and Mongolia, the Washington Post reported.
