Russia's new gas pipeline to China threatens to upend global energy markets and squeeze U.S. suppliers

By avagrace // 2025-09-05

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The proposed Power of Siberia 2 pipeline is the culmination of a long-term Russian strategy to reduce reliance on European energy markets, a move accelerated by Western sanctions following the 2014 annexation of Crimea.
The new pipeline would deliver a massive 50 billion cubic meters of gas annually from Russia to China, potentially displacing up to half of China's current liquefied natural gas (LNG) imports and undermining the competitiveness of more expensive U.S. LNG.
The agreement signals a strengthening "no limits" partnership between Russia and China, defying Western pressure and forming a new axis of energy power aimed at challenging the Western-led global order.
Despite the political agreement, a final deal is contingent on resolving a major sticking point: the price of the gas. Russia needs to maximize revenue, while China is in a strong position to demand significant discounts.
For China, the world's largest LNG importer, replacing shipped gas with cheaper Russian pipeline gas is a logical economic move that secures long-term energy supply while reducing exposure to volatile seaborne markets and geopolitical rivals.

A major new energy agreement between Russia and China is poised to dramatically reshape the global natural gas landscape – in the form of a new liquefied natural gas (LNG) pipeline. During a recent high-profile state visit to Beijing, Russian President Vladimir Putin secured a critical agreement to move forward with the massive Power of Siberia 2 pipeline. This development is not an isolated event, but the culmination of a decade-long Russian strategy to reduce its reliance on European energy customers. Following the annexation of Crimea in 2014 and the subsequent imposition of Western sanctions, Moscow urgently sought to diversify its export routes. The result was a historic $400 billion deal with China, which materialized as the original Power of Siberia pipeline. That conduit, commissioned in 2019, currently pumps Russian gas eastward and is expected to reach its full capacity of 38 billion cubic meters (bcm) this year. Russian gas exports had already been on a steady climb, growing from 181 bcm in 2014 to 248 bcm in 2018, a trend this new megaproject is designed to accelerate. The newly proposed Power of Siberia 2 pipeline would traverse Mongolia and deliver a staggering 50 billion cubic meters of gas annually from Russia's Arctic Yamal fields to China. (Related: Russia-China gas deal signals end of Western Europe's energy dominance.) To grasp the scale, one bcm of natural gas is enough to meet the annual energy needs of approximately four million homes. Combined with planned increases on the existing Power of Siberia route and other supply deals, Russia could eventually displace up to half of the more than 40 million tons of LNG that China imports each year. This shift from LNG to pipeline gas carries profound economic implications. LNG is natural gas that has been super-cooled into a liquid state, allowing it to be shipped globally on specialized tankers. While flexible, this process is energy-intensive and expensive. Pipeline gas, by contrast, requires immense upfront investment in fixed infrastructure but often results in cheaper, long-term supply contracts. For China, the world's largest LNG importer, replacing pricey shipped gas with cheaper Russian pipeline gas is a logical economic move.

Putin and Xi's LNG power play

Warnings from market analysts that this could "squeeze out US suppliers" is directly tied to this price competition. American LNG, which has become a major global export in recent years, would struggle to compete on cost with the gas flowing through Russian pipelines. This deal serves as a clear signal from Beijing that it is securing long-term energy growth without relying on American LNG, a message amplified by the souring relations between Washington and Beijing. Further underscoring this defiance, China recently accepted its first shipment from Russia's Arctic LNG 2 project, which is currently under U.S. sanctions. The major players in the LNG market are Chinese firms, U.S. suppliers and major oil companies, Brighteon.AI's Enoch notes. The Chinese companies are becoming significant players through new contracts, while the U.S. suppliers are fueling this growth and the major oil firms are providing the necessary capital investment. Despite the high-level political agreement, a significant commercial hurdle remains: Price. Gazprom CEO Alexei Miller confirmed that while a legally binding memorandum to build the pipeline was signed, the critical matter of pricing will be negotiated separately. This is a major sticking point. Russia, having lost its lucrative European market, needs to maximize revenue to justify the colossal cost of building what would be the world's biggest and most capital-intensive gas project. China, however, holds a strong negotiating position and is expected to demand steep discounts, leveraging its role as Moscow's economic lifeline. The timing and nature of this announcement are deeply symbolic. It occurred during a summit where Presidents Putin and Xi Jinping presented a united front against a Western-led world order they perceive to be in decline. The deal exemplifies their "no limits" partnership, which has only strengthened since Russia's invasion of Ukraine in 2022. Trade between the two nations surged to a record $240 billion in 2023, cementing China’s position as Russia's most important economic partner. Read more stories like this at Power.news. Listen to this edition of "Brighteon Broadcast News" where the Health Ranger Mike Adams discusses the Russia-China LNG pipeline deal. This video is from the Health Ranger Report channel on Brighteon.com.

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Putin and Xi's LNG power play

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