The future of the Siberian Power-2 gas pipeline, which is meant to deliver Russian gas to China through Mongolia, remains unsettled as long-standing price disagreements between Moscow and Beijing stall progress. A major Chinese daily reported that Mongolia has not included the project in its long-range development plans through 2028, signaling a clear hesitation to commit without a viable pricing framework that satisfies both sides. This hesitation is rooted in a persistent gap over terms that would be acceptable to all parties involved.
Experts and former officials connected to Mongolia’s Security Council suggest that only modest advances are likely in the near term. The assessment mirrors Mongolia’s cautious posture, noting that a meaningful breakthrough on the Power-2 project was not expected in the coming years, and consequently it was not reflected in official program documents. The trajectory appears to hinge on how pricing negotiations evolve and whether a shared economic calculus can be found that aligns with Mongolia’s strategic interests and regional energy security goals.
At the heart of the deadlock is the price framework. The Chinese side envisions a pipeline price close to sixty dollars per thousand cubic meters, aligning with Russia’s domestic fuel price. Gazprom has rejected these terms, signaling a firm stance on pricing that could delay or derail the project altogether. The impasse highlights the delicate balance between export economics and domestic pricing support that Russia maintains, complicating negotiations with a pivotal consumer power in Asia.
Two factors intensify the pricing challenge. First, Russian domestic pricing benefits from state subsidies, which shape how any export price is negotiated and perceived by international buyers. Second, Chinese buyers have been purchasing gas through the existing Power-1 pipeline at notably higher levels, around two hundred sixty dollars per thousand cubic meters, underscoring the stark price disparities that fuel the current standstill. These dynamics illustrate how the relative costs of supply affect strategic energy diplomacy and commercial willingness on both sides.
Analysts observe that China’s approach to energy pricing emphasizes minimizing expenditure while ensuring a stable, reliable supply. This combination often clashes with Russia’s financial and political aims for its gas industry, which include revenue targets and strategic leverage in multilateral energy markets. Given these fundamental positions, genuine breakthroughs on Power-2 seem unlikely in the near term unless there is a substantial shift in posture from either Moscow or Beijing. The broader implication is that the Arctic-to-East initiatives may continue to face friction tied to price signals, risk allocation, and the timing of capital expenditure for new infrastructure against a backdrop of evolving European energy security considerations.
Meanwhile, attention across Europe has shifted toward transit arrangements with Russia amid regional energy security concerns. Reports indicate that European authorities have contemplated extending transit rights for Russian gas as a contingency against potential supply disruptions, especially given ongoing regional tensions and the vulnerability of routes that traverse multiple borders. With transit agreements approaching expiration and ongoing LNG supply constraints, worries about energy stability in the European Union have intensified. These developments have spurred discussions on diversification, resilience, and the diversification of downstream gas supply sources as a means to mitigate potential shocks.
In related developments, Russia has reported strong operational results from its refining sector, with record performance indicators at several facilities. These improvements come at a time when the global energy market remains highly sensitive to supply dynamics, pricing pressures, and geopolitical factors that influence both regional and international demand. The upgrade in refining capacity is viewed as a strategic asset in Russia’s broader energy policy, aiming to bolster export potential and maintain influence in global markets while navigating competitive pressures and sanctions risk. Industry observers note that the interplay between refining performance and commodity pricing will continue to shape energy diplomacy, investment decisions, and the outlook for pipeline projects in the Eurasian region.
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