Putin and Xi Revive Power of Siberia 2 Pipeline Talks Amid Iran War Energy Shock

CNBC reported Wednesday that Russian President Vladimir Putin arrived in Beijing for a summit with Chinese President Xi Jinping, with the long-delayed Power of Siberia 2 natural gas pipeline taking center stage in their discussions.

Iran War Shakes Up China’s Energy Calculus

The timing of the talks is significant. A US-Iran conflict that began in late February has effectively shut down the Strait of Hormuz. That closure has cut off roughly half of China’s oil imports and nearly a third of its liquefied natural gas supply. The disruption has renewed Chinese interest in overland energy corridors that sidestep maritime chokepoints entirely. Kremlin foreign policy aide Yuri Ushakov confirmed Tuesday that the pipeline project would receive detailed attention from both leaders.

Also Read: What the Strait of Hormuz Closure Means for Global Oil Markets

What the Pipeline Would Actually Deliver

The proposed Power of Siberia 2 would run approximately 2,600 kilometers. It would draw gas from Russia’s Yamal fields and route supply through Mongolia into China. At full capacity, the line could carry 50 billion cubic meters annually. That would substantially supplement the existing Power of Siberia 1 system, which delivered around 38 billion cubic meters to Chinese customers in 2025. Both governments have already agreed to expand that existing line further.

Moscow and Beijing signed a legally binding memorandum in September 2025 to advance construction. But the deal has since stalled over pricing. China has pushed for rates matching Russia’s domestic pricing of roughly $120 to $130 per 1,000 cubic meters. Russia wants terms closer to the Power of Siberia 1 arrangement, which analysts estimate would more than double that figure.

A History of Competing Interests

Russia’s gas relationship with Europe collapsed after its 2022 Ukraine invasion. State energy giant Gazprom saw shipments to European customers reportedly fall 44% last year to multi-decade lows. That revenue loss sharpened Moscow’s urgency to lock in a major Eastern customer. Chinese purchases of Russian oil, meanwhile, jumped 35% year over year in the first quarter of 2026, customs data showed.

Also Read: Russia’s Gazprom Revenue Falls as Europe Cuts Gas Ties

Strategic Risks Run Both Ways

Analysts caution that the energy shock may not break the pricing deadlock. China holds roughly 92 days of crude inventory and its domestic gas output rose 2.7% through April. Central Asian pipelines also offer alternative supply. Michael Feller, chief strategist at Geopolitical Strategy, told CNBC that any final agreement would represent a deep mutual commitment. A signed deal, he said, would make the Sino-Russian relationship considerably harder for outside powers to unravel.

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