Russia-China Gas Ties: A Strategic Energy Play for Long-Term Stability and Growth

The Russia-China energy partnership is no longer a speculative bet—it’s a cornerstone of global energy geopolitics. As the West grapples with its own energy transitions and China races to secure cleaner, cheaper fuel for its industrial engine, the Power of Siberia pipeline network has emerged as a linchpin of strategic interdependence. For investors, this isn’t just about gas; it’s about a seismic shift in how energy is sourced, priced, and weaponized in a multipolar world.

Let’s start with the numbers. In 2024, China imported 31 bcm of Russian gas via the Power of Siberia 1 pipeline, a figure expected to hit 38 bcm in 2025 [1]. By 2030, Russia aims to export 98 bcm/y to China through a combination of Power of Siberia 1, Power of Siberia 2, and the Far Eastern Route [1]. That’s not just growth—it’s a structural transformation of China’s energy supply chain. Why does this matter? Because it’s replacing volatile LNG imports with a stable, landlocked pipeline. China’s LNG imports from the Middle East and Southeast Asia are exposed to geopolitical risks, from shipping chokepoints to U.S. sanctions. The Power of Siberia 2 pipeline, with its 50 bcm/y capacity, would lock in a cheaper, more predictable alternative [3].

But here’s the rub: pricing. Russia wants $257 per 1,000 cubic meters, while China demands $60 [2]. That $197 gap isn’t just a negotiation—it’s a $9.85 billion annual chasm. Yet both sides are inching closer. China’s recent agreement to purchase 10 bcm/y from Sakhalin Island by 2026-2027 shows its willingness to absorb higher prices to diversify its energy basket [1]. Meanwhile, Russia’s pivot to Asia is existential. With European demand collapsing post-Ukraine, Moscow needs China to fill the void. The Power of Siberia 2 isn’t just a pipeline; it’s a lifeline for Russia’s energy economy [2].

Geopolitically, this partnership is a masterstroke. For China, it reduces reliance on LNG and maritime routes, which are vulnerable to U.S. naval dominance. For Russia, it creates a counterweight to Western sanctions and reinforces a yuan-ruble trade bloc [4]. The Soyuz Vostok segment through Mongolia, though delayed, is critical. If completed by 2028, it would cement a tripartite energy corridor, with Mongolia acting as a transit hub [2]. But here’s the risk: Mongolia’s exclusion of Soyuz Vostok from its 2024–2028 national plan could delay timelines [2]. Investors must watch for updates on environmental assessments and fiscal commitments from Ulaanbaatar.

The stakes are even higher when you consider China’s broader energy strategy. In July 2025, it accounted for 42% of Russia’s fossil fuel export earnings, with 66% of those imports being crude oil [5]. This isn’t just about gas—it’s about creating a fossil fuel alliance that bypasses the dollar. With 95% of bilateral trade now settled in yuan and rubles [4], the Russia-China axis is building a parallel financial system. For investors, this means exposure to a world where energy and currency are intertwined, and Western sanctions are increasingly irrelevant.

However, don’t ignore the headwinds. Power of Siberia 2’s construction timeline remains uncertain, with Gazprom and CNPC still hashing out terms [5]. Alternative routes through Kazakhstan were rejected by Beijing due to cost, leaving Mongolia as the only viable path [4]. Environmental assessments for Soyuz Vostok are due in Q3 2025 [2], and any delays could push the project into the 2030s.

The bottom line? This is a long-term play. The Power of Siberia 2 pipeline represents a $9.85 billion annual revenue stream for Russia and a $60/bcm cost advantage for China. For investors, the key is to position for the infrastructure buildout and the geopolitical realignment it enables. Energy stocks with exposure to Siberian gas fields, Mongolian transit corridors, and Chinese LNG terminals could all benefit. But patience is required—this isn’t a short-term trade. It’s a bet on the future of a world where energy flows from East to West, and the old order is crumbling.

Source:
[1] Russia's growing energy ties with China since the Ukraine war [https://www.reuters.com/business/energy/russias-growing-energy-ties-with-china-since-ukraine-war-2025-09-01/]
[2] Power of Siberia 2: A Pipeline Between Ambition and Uncertainty [https://trendsresearch.org/insight/power-of-siberia-2-a-pipeline-between-ambition-and-uncertainty/?srsltid=AfmBOorhozIMY4YiqJlpsN8U4pPWWjX7fJ3VgyQsYkyp1wTemNGl3NQk]
[3] Power of Siberia 2 Gas Pipeline [https://www.gem.wiki/Power_of_Siberia_2_Gas_Pipeline]
[4] The Rise of a Multipolar Financial Order: China-Russia Alignment [https://www.ainvest.com/news/rise-multipolar-financial-order-china-russia-alignment-reshaping-global-markets-2509/]
[5] July 2025 — Monthly analysis of Russian fossil fuel exports [https://energyandcleanair.org/july-2025-monthly-analysis-of-russian-fossil-fuel-exports-and-sanctions/]