Russia-China Gas Deal Stalls on Price Dispute

The Power of Siberia 2 pipeline project, intended to link Russia and China, has stalled due to a severe price mismatch. Beijing has instructed Moscow to cease further negotiations, leaving no formal withdrawal but no concrete timeline for a deal or construction start.

The agreement, initially approved by both nations last September, aims to transport up to 50 billion cubic meters of gas annually from Russia’s Yamal fields via Mongolia to China. However, the crux lies in pricing, with China insisting on a rate comparable to Russia’s domestic subsidized pricing, while Moscow demands around US$250 per thousand cubic meters.

Pre-war, Russia sold gas to Europe and Turkey at US$275–340 per thousand cubic meters. China currently imports Russian pipeline gas at US$240–280 per unit, below Europe’s former rates. China’s new bid of US$50 per unit positions it as a significant discount, even below Belarusian terms.

This challenge contradicts China’s stated “no-limits” partnership with Russia. Analysts note Russia’s vulnerabilities, including Ukraine drone strikes, EU LNG phase-outs by 2026, and Beijing’s resumed U.S. LNG purchases post-May Trump-Xi meetings.

A Hebei-based columnist argues China’s diversified energy sources—growing domestic output (262 billion m³ in 2025), Central Asian pipeline capacity (85+ billion m³ annual), and steady LNG imports from Qatar, Australia, and Malaysia—grant it unmatched leverage. “Russia is in a buyer’s market now,” they state.

Another commentator, New Day Student, asserts China’s supply alternatives render it “a buyer with no urgency.” They emphasize the EU’s 2027 ban on Russian gas as a critical deadline Russia must meet, questioning whether rerouting via Kazakhstan would bypass pricing issues.

Historical perspectives reveal Russia’s reliance on high-energy exports since the 1991 Soviet collapse. A Shandong analyst advocates for competitive pricing and joint infrastructure projects, suggesting reciprocal benefits, including Chinese refiners supplying fuel to regions targeted by Ukraine drones.

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