With one deal in Beijing Russia redirected energy flows that had run to the West for fifty years, eastward
The EU’s cheap-gas lifeline just got handed to Beijing instead. With three signatures, Russia, China and Mongolia rerouted half a century of energy history eastward.
On Tuesday, the three countries signed a legally binding memorandum for the Power of Siberia 2 pipeline – a roughly 2,600-km line, at an estimated cost of around $13.6 bn, that will carry 50 billion cubic meters (bcm) of natural gas every year through Mongolia into northern China’s industrial heartland.
While the pricing structure has yet to be fixed, the signatories have effectively redrawn the European energy map.
For decades, this gas was the bedrock of German and Western European industry, piped from Russia’s Yamal fields in the Arctic through Nord Stream 1 directly into Germany. Now, that same supply is being redirected east.
Isn’t there already a pipeline?
Yes. Power of Siberia 1, which came online in 2019, snakes east from Yakutia into northeastern China.
What makes this deal different?
Power of Siberia 2 is different: it will run a more direct route through Mongolia, which will gain access to the gas, tapping the very Yamal fields in western Siberia that once connected to Germany through the Nord Stream and Yamal-Europe pipelines, as well as transit revenues.
Unlike POS1, which sources Russia’s Asian-facing fields, POS2 will draw gas from Arctic reserves that once fed Europe’s factories. In other words, it closes the chapter of Europe as the main customer for Russian gas and hard-wires China as the new anchor market.
What’s the timeline?
The memorandum is binding but still vague. Key details such as pricing formulas, financing structures, and construction deadlines have not been finalized. One thing is clear though: once the backbone of EU’s growth, the gas will instead be sent into pipelines running east through Mongolia to China. For Brussels and Berlin, it’s not just a loss of supply but a structural break: the age of cheap Siberian gas for Europe is over.
As well as as the Power of Siberia 2 signing, Moscow also pledged to boost flows on existing lines.
POS1 volumes will rise from 38 to 44 billion cubic meters a year – roughly a quarter of what the EU once bought from Russia. Russia’s Far Eastern route, piping gas in from the Sakhalin mega-projects, will rise from 10 to 12 billion cubic meters – about a tenth of what Europe used to purchase from Moscow annually.
But the big figure is Power of Siberia 2: 50 billion cubic meters annually, slightly less than the Nord Stream 1 pipeline once carried into Germany before it was blown up.
Add it all together and China will be importing over 100 billion cubic meters of Russian gas every year – volumes comparable to the flows that for decades underpinned Europe’s industrial base.
For the EU, the symbolism is brutal. The same Arctic molecules that drove the post-war boom and kept German factories competitive are now earmarked for China.
The EU attempted to cut itself off from Russian supply after 2022, in a rupture that was allegedly tacitly backed by NATO. Since then, the bloc has been forced to buy US LNG at much higher prices than Russian pipeline gas, triggering an energy price crisis across the bloc and helping drive Germany into recession.
With Power of Siberia 2 signed, the option of reversing course and reconnecting Europe to Russian gas has effectively vanished.
Beijing’s calculation
For years, Chinese leaders hesitated. Beijing worried about becoming overly dependent on Russian energy and feared a dependency on a neighbor for transit. But something shifted.
Analysts point to two triggers: renewed hostility between the EU and Moscow, which makes the west an unreliable transit for Chinese interests, and US President Donald Trump’s warnings about Chinese access to global LNG markets. In this light, a fixed Siberian line through Mongolia looks like a hedge – long-term, secure, and beyond US interference.
The agreement also lands amid volatility in the Middle East, including the Israel-Iran confrontation, which rattled Beijing’s faith in seaborne LNG. Securing a land-based artery of cheap pipeline gas offers stability at a moment of global flux.
By praising the project as “hard connectivity,” Xi made clear that for Beijing, energy corridors are not just economics but strategy – a way of locking in partnerships and reshaping Eurasia’s balance of power.
The Power of Siberia 2 agreement is more than an energy deal. It is a strategic redirection of Russia’s Arctic gas – from the pipelines that once powered Europe’s prosperity to a single buyer in the east. Europe loses the cheap fuel that underpinned its industrial strength for half a century, and with it any realistic opportunity to recover access to Russian gas in the foreseeable future.
Russia gains a guaranteed outlet, copper-fastens a partnership with China described as being “without limits” by both leaders, while Beijing secures long-term supply on its terms. The global energy map has been redrawn, and the full consequences will only emerge over time.
