The US President Donald Trump’s move to cut off Russia’s oil revenue to end the Ukraine war suffered a blow when Russia and China signed a deal on the Power of Siberia 2 gas pipeline. The route will substantially hike Russia’s gas supply to China. Experts contend the pipeline will cement the bilateral energy ties, and pose a geo-strategic challenge for the US. It can jeopardise the possibility of the US’ aim to increase its share in the Chinese energy market from five per cent to 25 per cent. America is the world’s largest exporter of Liquefied Natural Gas (LNG) and China, the largest importer.
The growing closeness of the two Communist partners has worried Trump during his second term. The latest deal between Russian oil giant Gazprom and China National Petroleum Corporation to build the Power of Siberia 2 and Soyuz Vostok transit pipeline, through Mongolia, heightens his ongoing concerns. Energy experts, Jane Nakano and Leslie Palti-Guzman, feel that Moscow and Beijing have staged a diplomatic coup that will firmly anchor the eastward flows of Russian gas. It puts Moscow in a tighter embrace with Beijing, given Russia’s growing dependence on China during the past three years of the Ukraine war.
In the recent months, Trump tried to wean Russia from China. He took the initiative of bringing Russia and Ukraine together on the negotiating table to end the Ukraine war. Having failed on both counts, the American President pressurised countries like India, Turkey, and others to stop buying Russian oil and gas, and increase their purchases of US’ LNG, in return for lower American tariffs. Geopolitical analyst, Sebastian Contin Trillo-Figueroa, told the Hong Kong media that the proposed pipeline, which will transport 50 billion cu m of gas to northern China each year, reduces the costlier and risk-prone LNG cargo shipments. An overland supply is cheaper and more secure, and can help China to bypass chokepoints and “insulate” it from the global price swings.
The $13.6 billion pipeline has been in discussion since 2006. In the face of the recent western sanctions on Russia, the pipeline’s importance grew for both Moscow and Beijing, as China emerged as a large alternative market for Russian oil and gas. Chim Lee, a senior analyst at the Economist Intelligence Unit, said that the opening of the Power of Siberia 2 could mean that “as much as half” of China’s imported natural gas would come from Russia.
In 2021, Russia earned $237 billion from energy exports, with a major portion through gas exports to Europe. After the war in Ukraine, Russia’s share in Europe dropped from 45 per cent in 2021 to 18 per cent in 2024, according to the Centre for Energy and Clean Air. The European Union has pledged to stop Russian purchases by 2027. China is the top buyer of gas since 2021. The International Energy Agency expects China’s LNG imports to decline from 2025 because of a combination of increase in supply through both domestic pipelines and the existing Power of Siberia-1 project.
Chim Lee says that the US has a “lot at stake” when it comes to the new pipeline. China may end up buying less in the global market, which will have a ripple effect on prices. If the pipeline goes ahead, it will send a strong signal that China values its ties with Russia, he adds. The price of the gas via the new pipeline is a sore point between the two nations. If they arrive at a consensus, the pipeline can start functioning in 2027, and reach full capacity by 2030.
“India imports natural gas, primarily as LNG, which is delivered by sea, and not through pipelines,” explains Talmiz Ahmad, a former diplomat and expert on energy security. India mainly imports crude oil from Russia, and not gas. But India is the world’s fourth-largest LNG importer. It imported 24 million tonnes of gas in 2023-2024, and projections suggest the imports to rise significantly by 2030. India and Qatar entered into an agreement this year for the latter to supply 7.5 million tonnes per year of LNG for 20 years (2028 to 2048).
The growing Sino-Russia partnership is a diplomatic niggle that sections in the Indian strategic establishment are unable to overlook. Russia is one of the most reliable strategic partners. However, realists in New Delhi feel that the recent developments need to be looked at carefully. “We should closely watch the larger implications of the pipeline project,” says Anil Wadhwa, a former Indian diplomat who dealt with both Russia and China in the past.
In the past, Russia has valued its partnership with India as a hedge against China. A growing view among sections of Indian observers now is that the Ukraine war may have changed the dynamics, equations, and balance. There may be a perceptible change in Russia’s relations with China and India. China’s Foreign Minister Wang Yi recently told the European Union’s Foreign Affairs Chief Kaja Kallas that Beijing did not want Russia to lose in Ukraine. The reason: the US would shift its focus on Beijing.