Moscow and Beijing could seal major gas pipeline deal by year-end – Russian deputy PM

Gazprom and CNPC are negotiating terms for the planned Power of Baikal pipeline, which could carry 50 billion cubic meters of gas annually via Mongolia

Russia and China could finalize agreements on a major new gas pipeline by the end of the year, Russian Deputy Prime Minister Aleksandr Novak said on Wednesday, in a potential breakthrough that would significantly expand Moscow’s energy exports to Asia.

Speaking to reporters on the sidelines of talks between Russian Prime Minister Mikhail Mishustin and his Chinese counterpart Li Qiang in St. Petersburg, Novak said the planned Power of Baikal pipeline was among the issues discussed.

“Our companies – Gazprom and China National Petroleum Corporation – are negotiating a second route for gas supplies from Russia to the People’s Republic of China,” he said. “We are waiting for our companies to complete commercial negotiations and hope they will reach the relevant agreements by the end of the year.”

Li arrived in St. Petersburg on Tuesday for the regular meeting of the Russian and Chinese heads of government.

Russia already supplies gas to China through the Power of Siberia, a more than 3,000-kilometer pipeline launched in 2019. It carries gas from the Chayandinskoye field in Yakutia and the Kovyktinskoye field in Irkutsk Region through Russia’s Far East and across the border near Blagoveshchensk, connecting to a Chinese network extending toward Shanghai. Its annual export capacity is 38 billion cubic meters (bcm), with deliveries reaching 38.8 bcm in 2025.

The planned Power of Baikal, previously known as Power of Siberia 2, would open a major new energy corridor. The roughly 2,600-kilometer pipeline is designed to deliver up to 50 bcm annually from Russia’s Arctic gas fields on the Yamal Peninsula to China via Mongolia, including the Soyuz Vostok transit pipeline.

Unlike Power of Siberia, which draws gas from eastern Siberia, the new route would tap western Siberian reserves that previously supplied Europe, giving Moscow a major new outlet for gas following the collapse of much of its European market. Novak said the project was renamed Power of Baikal to distinguish it from the existing pipeline and reflect its planned route along the southern shore of Lake Baikal. The precise route remains subject to final commercial agreements.

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Together, the two pipelines would give Russia a combined nominal export capacity of around 88 bcm annually to China – roughly 80% of the 110 bcm combined capacity of Nord Stream and Nord Stream 2, built to supply Russian gas to Europe via the Baltic Sea.

Gazprom and CNPC signed a legally binding memorandum on the project in September 2025, envisaging deliveries of 50 bcm annually over 30 years. A final supply contract, however, was not signed. Pricing is a key sticking point, with media reports suggesting Beijing is seeking rates close to Russia’s domestic prices, while Moscow has pushed for more commercially favorable terms. President Vladimir Putin said last year that pricing would follow a market-based formula similar to that used for European supplies, stressing that there would be “no charity” on either side.

The expansion comes as Russia accelerates its energy pivot toward Asia in light of Western sanctions and EU efforts to phase out Russian supplies. Before the Ukraine conflict escalated in 2022, Europe was Russia’s largest pipeline gas market, with Gazprom providing around 40-45% of the bloc’s total gas imports. Deliveries subsequently plunged as Brussels pursued alternative suppliers and imposed successive sanctions on Russia.

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Meanwhile, China has emerged as Russia’s largest pipeline gas customer, with Power of Siberia reaching its full contracted capacity and further export routes under development.

Unlike oil, which can be redirected by tanker, pipeline gas requires extensive infrastructure, making Power of Baikal a key project in Moscow’s efforts to replace lost European demand. Moscow has repeatedly accused Western governments of undermining European energy security through their sanctions policies.

The shift also follows the September 2022 sabotage of the Nord Stream pipelines that previously brought Russian gas to Germany beneath the Baltic Sea. Novak said on Wednesday that Moscow remains ready to resume deliveries through the one Nord Stream pipeline string out of the four that remained undamaged.

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“We have one of the four strings in working condition. If European consumers and politicians want it, supplies can, of course, be delivered through that line,” he said. The decision rests primarily with European countries, particularly Germany, where the pipeline terminates, Novak added. He said the three damaged strings could also be restored if demand and economic conditions justified repairs, suggesting it would not take long to bring them back to working order.

Russia has repeatedly offered to resume energy supplies to Europe, particularly in light of the disruptions to global markets caused by the Middle East crisis, but says its proposals have received no response from European governments.