China-Russia memorandum on Power of Siberia-2 points to some benefits

This isn’t just the pipeline itself, which needs to stretch over 2,000 kilometers (longer than the distance from Kyiv to Paris). The budget also includes drilling additional wells, building a system of pumping stations, and completing a petrochemical plant. Under sanctions and amid Russian corruption, this figure is likely to rise significantly.

"Since China doesn’t urgently need this pipeline (otherwise it would have been built long ago), it’s clear that Russia will have to cover most of the construction costs. Unlike domestic social programs, which the Kremlin cuts to fund the war, these expenses are unlikely to be reduced."

Meanwhile, the benefits of the pipeline currently exist only on paper, and there’s no guarantee they will materialize. China has consistently insisted on prices tied to Russia’s domestic gas rates—which are effectively subsidized by the Russian budget. In any case, the price will be low and will differ sharply from EU market prices, which Russia lost due to the war. The same goes for volumes: China already has long-term contracts securing gas deliveries through 2030, and Russia can only hope to replace certain emergency volumes. With the global energy transition toward renewables, this project may never become operational.

However, there is one scenario in which China would definitely need Power of Siberia-2. If China invades Taiwan, its seaports would likely be blocked, cutting off LNG shipments by sea. In that case, alternative sources would be needed, and a new Russian pipeline could become critical. The memorandum for Power of Siberia-2 may, therefore, theoretically signal China preparing for the consequences of a Taiwan invasion.

In any case, the fact that Russia will be forced to divert funds from the war to finance a project of questionable economic value is, in itself, not entirely a negative outcome.

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About the author. Mykola Kniazhytskyi, journalist, Member of the Ukrainian Parliament.

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