Putin-Xi Pipeline Talks
CNBC reported Wednesday that Russian President Vladimir Putin and Chinese President Xi Jinping held talks in Beijing with the long-stalled Power of Siberia 2 natural gas pipeline high on the agenda. The discussions come as an ongoing U.S.-Iran war continues to disrupt global energy supply chains.
A Pipeline Years in the Making
The proposed infrastructure would stretch roughly 2,600 kilometres, routing Russian gas from the Yamal fields through Mongolia into China. It carries a projected annual capacity of 50 billion cubic meters. Moscow and Beijing agreed to a binding memorandum in September 2025 to advance the project, but core commercial terms remain unsettled. China has pushed for pricing near Russia’s domestic rate of around $120-130 per 1,000 cubic meters. Russia is reportedly seeking rates closer to those governing the existing Power of Siberia 1 pipeline, which analysts estimate would more than double that figure.
Background: Russia’s Shrinking Export Options
Russia’s gas relationship with Europe effectively collapsed following its 2022 invasion of Ukraine. State energy group Gazprom saw European shipments reportedly fall 44% last year to multi-decade lows. That export erosion has made China structurally vital to Moscow’s energy revenues. Power of Siberia 1 already delivers roughly 38 billion cubic meters annually to China, with both governments agreeing to expand that capacity further. A second pipeline of this scale would deepen Moscow’s dependence on a single buyer, raising exposure risk for Russia if negotiations sour.
Also Read: What the U.S.-Iran Conflict Means for Global Oil Prices
Iran War Reshapes Beijing’s Calculus
The conflict in Iran has effectively shuttered the Strait of Hormuz, cutting off approximately half of China’s seaborne oil imports and around one-third of its LNG arrivals. That disruption creates fresh incentives for Beijing to diversify toward overland energy routes. However, analysts remain cautious about overstating the pressure on China to concede on pricing. According to Kpler senior oil analyst Muyu Xu, China holds around 1.23 billion barrels of onshore crude reserves, covering roughly 92 days of refining demand. Domestic gas production also rose 2.7% in the first four months of 2026, and Central Asian pipelines provide supplemental supply.
Summit Signals, Pipeline Silence
At a joint press conference, Putin described the bilateral talks as warm and constructive, characterising Russia-China relations as reaching an unprecedented level. He affirmed Moscow’s readiness to maintain uninterrupted energy exports to China’s growing market. Notably, he made no direct public mention of Power of Siberia 2, and it remained unclear whether pipeline-specific agreements were signed Wednesday.
Read Next: Strait of Hormuz Closure Sends LNG Spot Prices Surging
