Summary of Key Points
During Putin's visit to China in 2026, the agreement for the "Siberian Power 2" natural gas pipeline, which both Russia and China were looking forward to, was once again delayed. The Chinese side is not in a hurry to sign the deal because their energy mix has become increasingly diversified over the years (with breakthroughs in new energy sources and clean coal), and they already have sufficient supply through three existing cross-border pipelines. Therefore, they insist on obtaining favorable terms during negotiations (such as being sold at Russian domestic prices and reduced mandatory gas purchases). On the Russian side, although there is a urgent need for exports, they are unwilling to make concessions. The article also discusses the current status of China's three cross-border natural gas pipelines, the differences between LNG and pipeline gas, and the role of land-based pipelines in countering maritime dominance.
I. "Siberian Power 2" Negotiations: Why Is the Chinese Side So Resolute?
China's confidence comes from three main factors:
1. Diverse Energy Options: Over the past 20 years, China has developed a new generation of nuclear power, clean coal technology, and built more hydropower stations, wind farms, and affordable solar panels. Non-traditional energy sources can meet a significant portion of its energy needs. Even if the Strait of Hormuz were to be closed, China's vast oil reserves would ensure no short-term shortage of gas.
2. Sufficient Existing Pipelines: The Central Asian pipeline, the China-Russia East Route, and the China-Myanmar pipeline already supply a substantial amount of natural gas, so there is no need to sign a 30-year contract for just a few months' worth of demand.
3. No Leverage for Russia: Although Russia urgently needs to sell gas to earn revenue, Russian gas companies are unwilling to accept Chinese terms (such as selling at domestic prices and reducing mandatory purchase requirements). European scholars warn that if it becomes easier for China to generate its own electricity, Russia's opportunities may be completely lost.
II. China's Three Cross-Border Natural Gas Pipelines: Each with Its Own Advantages
These three pipelines serve different purposes:
1. Central Asian Pipeline: The cheapest and most reliable source. Central Asian countries (such as Turkmenistan) do not need much gas for their own use and cannot sell it easily due to being landlocked, giving China significant bargaining power. The cost of Central Asian gas is less than half that of imported LNG. Currently, the three lines transport 40 billion cubic meters per year, and with the opening of a fourth line, this amount could increase to 65 billion cubic meters, potentially including all five Central Asian countries in the supply network. Turkmenistan sells 80% of its gas to China, making it a valuable partner.
2. China-Russia East Route: After years of negotiation, this pipeline (Siberian Power 1) enters China through Heilongjiang and is planned to transport 44 billion cubic meters per year by 2026. Initially, Russia wanted to charge European prices, but it agreed to lower them after Western sanctions in 2014. The current price is somewhere between that of Central Asian and European markets.
3. China-Myanmar Pipeline: This pipeline supplies gas to regions in southwest China (Yunnan, Guizhou, Guangxi, Chongqing) and avoids the need to go through the Strait of Malacca. However, the demand in these areas is low, and the infrastructure is not well-developed; most of the gas used is LNG imported by sea, which is more expensive than Central Asian gas. As a backup option, it still provides a useful alternative.
III. LNG vs Pipeline Gas: Why Does China Want Both?
International natural gas trade comes in two forms, each with its advantages and disadvantages:
- LNG (Liquid Natural Gas): Like bottled gas, LNG is cooled, compressed, and transported by ship, allowing for flexible purchases in any quantity. However, the cost is higher due to the additional processes of liquefaction, transportation, and regasification.
- Pipeline Gas: Similar to a water supply system, pipeline gas requires a one-time investment but offers lower long-term costs (about 30% cheaper) and is suitable for neighboring countries and long-term collaborations.
China's strategy is to use both types of gas: pipeline gas for stability and reliability, and LNG as a backup to meet short-term needs. Therefore, even if the "Siberian Power 2" agreement is not signed, China will not face a shortage of gas.
IV. Land-Based Pipelines: A Line of Defense Against Maritime Dominance
There is a global reality that those who control maritime routes can control energy supplies. Examples include the Strait of Malacca and the Strait of Hormuz, which are under US influence. Land-based pipelines help avoid such risks:
- The China-Myanmar pipeline avoids the Strait of Malacca and transports gas directly from Indian Ocean ports in Myanmar.
- The Central Asian and China-Russia pipelines use land routes, reducing the risk of maritime blockades.
As the US maritime order becomes increasingly unstable, the importance of land-based pipelines is growing. This is one of the reasons why China is investing heavily in cross-border pipeline projects.
Conclusion
China is becoming more confident in its energy security, relying less on a single source and negotiating favorable terms. The delay in the "Siberian Power 2" agreement reflects China's enhanced energy autonomy—no longer compromising long-term interests for short-term needs. The layout of these three cross-border pipelines further enhances China's energy security.