From Nord Stream to Power of Siberia: How China Wins, Russia Concedes, and Europe Pays

The Tianjin summit, convened on Monday, September 1 by the Shanghai Cooperation Organization (SCO), was first and foremost a stage for a show of strength-primarily rhetorical-directed against "the Western-led world order", and more specifically against Trump’s America. It brought together uneasy partners such as India, China, and Pakistan in their shared rejection of Washington’s aggressive trade policies. More significantly, however, the summit served as a showcase for consolidating the Beijing-Moscow axis and displaying a reinforced sense of strategic solidarity. Beyond the overstated proclamations of China’s "new world order" narrative, the most tangible announcements were made in the field of energy.

China’s official news agency Xinhua reported that the two countries signed more than twenty cooperation agreements, notably in the energy sector. Among these, one development stands out: although Beijing has not yet confirmed it, Russia’s Gazprom PJSC announced on Tuesday, September 2 that it had signed a legally binding agreement for the construction of the long-anticipated "Power of Siberia 2" pipeline to China via Mongolia, along with an expansion of deliveries through other routes. This project is strategically significant, as it would redirect gas from the Yamal and northern Orb peninsula fields-previously intended for European markets via the now-defunct Nord Stream pipelines-towards China.

According to the same sources, Miller further noted that the price of gas would be lower than what Gazprom currently charges its European customers. While not exactly a revelation, certainly not surprising, and clearly political (given Russia’s favorable treatment of China), it still remains counterintuitive: Yamal is far from China, so delivering to Chinese customers will be costly. The fact that Gazprom has not yet disclosed any of the terms of this agreement and that China has not yet confirmed anything is telling: China has the upper hand. Indeed, Russia is desperate to find buyers for its gas, while China enjoys multiple alternative supply options through pipelines, notably from Central Asia, and has therefore been able to negotiate prices down to a minimum - even if the terms of the price negotiated with the Russians are unknown, as was already the case for Power of Siberia 1.

While Russia has long been pushing for this agreement, China has deliberately delayed, mindful of the slowdown in its gas demand growth and wary of increasing its dependence on a single supplier.

Nevertheless, natural gas has become one of Beijing’s strategic pillars. Backed for more than a decade by massive investments in exploration, transport, and storage, it has propelled China to the rank of the world’s largest liquefied natural gas (LNG) importer. In 2023, China overtook Japan by importing 72 million tons of LNG, compared with 66 million tons for its neighbor. Imports rose further in 2024, reaching 78 million tons. Of this volume, 6 percent came from the United States.

LNG has been a tool for managing Sino-U.S. relations in recent years. During Trump’s first term, Beijing leveraged LNG purchases to ease tensions over the U.S. trade deficit. The same strategy resurfaced in early negotiations at the start of Trump’s second term, with China again offering to increase U.S. LNG imports-though with far less success this time.

A Chinese Gas Strategy Anchored in "Strategic Ambiguity"

Officially, China’s 14th Five-Year Plan frames the country’s gas trajectory within the objectives of the Paris Agreement. In practice, however, the role of gas remains ambiguous: between concrete policies, research scenarios, and industrial visions, its deployment fluctuates widely-illustrating the classic motto of China’s energy transition, "Everything, Everywhere, All at Once."

In this context, additional Russian supply fits neatly into China’s approach: securing more volumes, lowering costs thanks to a supplier desperate after the collapse of its European pipeline contracts, and placing Beijing in a near-control position over Russian gas.

An Entrenched Dependence

The numbers are telling. In 2024, Russia exported around 145 billion cubic meters of gas (111 bcm by pipeline and 35 bcm as LNG). Of this, roughly 31 bcm still flowed by pipeline to the EU, and another 20 bcm as diverted LNG-around 51.7 bcm in total, a figure steadily declining since the invasion of Ukraine, but with Europe still Russia’s largest market. By contrast, China imported 31 bcm via Power of Siberia 1 (Gaz coming from Yakutia region, close to China) and around 8 bcm as LNG-about 40 bcm in total. Once Power of Siberia 2 comes online, China would absorb two thirds of Russia’s current gas exports-around 98 bcm out of the current 145 bcm-with over half of those flows effectively locked in through non-redirectable pipeline deliveries (roughly 80 bcm). Even if Russia were to increase production-and considering that, before the invasion of Ukraine, Europe accounted for a similar share of Russian gas exports-this still represents a textbook case of monopsony by a single country, thinly disguised under the rhetoric of Sino-Russian "friendship."

Moreover, even before the construction of Power of Siberia 2, Gazprom agreed at Tianjin to increase its deliveries to China by 6 bcm per year through the already-operational Power of Siberia 1 pipeline. Finally, reports suggest that flows from the planned Far Eastern connection to China-scheduled to begin operations in 2027-will also exceed the initially announced 10 bcm per year. These additional volumes will only deepen China’s monopsony over Russian gas.

Who Benefits? Who Bears the Cost?

This agreement is portrayed as a major victory for Vladimir Putin, who increasingly relies on China to replace Europe as Russia’s main gas buyer. On its own, the deal could indeed offset nearly half of the gas exports to Europe that Russia has lost since the start of the war in Ukraine. But this will nevertheless prove to be a Pyrrhic victory for Russia, which would end up selling more than half of its gas exports at heavily discounted prices to a single customer.

The narrative surrounding the agreements signed in Tianjin is first and foremost geopolitical. The forum served as a collective attempt by participating countries to challenge Donald Trump and his trade policies. For China, the message to Washington is twofold: beyond its determination to shield itself from the financial and trade architecture dominated by the United States-the so-called Western world order-it also has little real need for U.S. LNG, except perhaps as a token gesture. In fact, the United States is far from being China’s main LNG supplier. With only a 6 percent share, the U.S. ranks fifth, behind Australia (34 percent), Qatar (24 percent), Malaysia (10 percent), and Russia (9 percent). On the other hand, China accounted for 29 percent of U.S. LNG exports in 2024, meaning the dependence runs largely in the opposite direction. Losing Chinese buyers would therefore be theoretically more problematic for U.S. producers than for China. In this way, China is killing two birds with one stone: by locking in Russia as a long-term supplier while simultaneously positioning itselfto undermine the United States - which, in turn, is pushed to rely more heavily on Europe to absorb its energy production.

Rather, the real deal is that China sees a golden opportunity to secure extremely cheap energy from a so-called "friendly" country over which it exerts increasing economic leverage and on which that country has become dependent. In every respect, Beijing emerges as the only real winner of this operation.

Although this agreement may in practice amount to little more than a Memorandum of Understanding, it is highly revealing of the trajectory China intends to pursue in the coming years-not only in energy policy and decarbonization, but also in industrial strategy. Beijing seeks to challenge the established order wherever possible, through both words and actions, while securing energy supplies at the lowest possible cost by locking in heavily discounted Russian resources over the long term. At the same time, it continues to roll out massive volumes of domestically manufactured renewable energy equipment and to rely on low-cost domestic coal-a combination that epitomizes the cheap abundance underpinning China’s industrial policy.

While Russia may not be the true winner of this deal, it is Europe that seems to be the real loser in this new global energy order. First, the Russian invasion of Ukraine-and Europe’s subsequent effort to reduce its reliance on Russian gas-has driven energy prices on the continent sharply and persistently higher. In addition, the recent trade negotiations between the U.S. and the EU are telling: Donald Trump pushed for up to $750 billion in energy purchases-primarily fossil fuels and natural gas-as part of a broader agreement. While the European Commission cannot formally commit to energy contracts it does not control, this episode underscores the stark reality Europe faces: prohibitively high energy costs, a strained transatlantic relationship increasingly at odds with Europe’s decarbonization agenda, and direct competition with a Chinese economy powered by cheap energy-whether green or not-sourced from a wide-range of suppliers it controls, domestically or from across the globe.


Xi Jinping and Vladimir Putin at the Shanghai Cooperation Organization (SCO) Summit 2025 in Tianjin on September 1, 2025.
Copyright image : SUO TAKEKUMA / POOL / AFP.