Xi, Putin tighten ties in Beijing with apparent gas breakthrough

Xi and Putin have pushed their nations closer together since Russia’s full invasion of Ukraine in early 2022. Bloomberg

President Vladimir Putin appears to have secured a diplomatic win he has sought for years, with a massive pipeline deal that would tie Russia and China together for decades and could redefine the global gas trade.

The head of Russia’s Gazprom PJSC, speaking to Russian media in Beijing, said the gas giant has signed a legally binding agreement to build the long-anticipated Power of Siberia 2 pipeline to China via Mongolia. While Beijing has yet to confirm details of the deal, securing any advance in the project is a diplomatic coup for Putin as Moscow grapples with the impact of Western sanctions.

The announcement came as Chinese leader Xi Jinping and Putin shared bonhomie over tea in Beijing on Tuesday. Xi welcomed Putin by calling him an “old friend” and added that “China-Russia relations have withstood the test of changing international circumstances.” Putin thanked Xi for the warm welcome and said Russia–China ties “are at an unprecedentedly high level.”

Xi and Putin have pushed their nations closer together since Russia’s full invasion of Ukraine in early 2022. Xi is using a meeting of the Shanghai Cooperation Organization security bloc and a major military parade in the Chinese capital this week to tighten relations with Putin and other world leaders, especially Indian Prime Minister Narendra Modi.

That diplomatic push comes after US President Donald Trump has slapped nations around the world, including China and India, with tariffs on their exports.

Beijing’s agreement to buy more Russian gas also amounts to a rebuke of the US president, who days ago imposed 50% levies on Indian goods as punishment for its Russian oil purchases.

The warming Beijing-Moscow ties have benefited both sides while Russia’s economy grapples with Western sanctions levied over its attack on Ukraine. Bilateral trade rose to a record $245 billion in 2024, up 68% from 2021, according to Chinese customs data.

Progress on the Power of Siberia 2, though, would set a new benchmark for the closeness of their relationship. Discussions around the mega-project have been stalled for years. While Russia has been eager to advance it in order to compensate for lower European deliveries following the invasion in Ukraine, China has been far more cautious. Gas demand has been slowing and Beijing is wary of excessive dependence on a single supplier.

In comments made to Russian wires from Beijing, Chief Executive Officer Alexey Miller said the gas producer could ship as much as 50 billion cubic meters a year via the Power of Siberia 2 for 30 years. Gazprom would also increase flows by smaller amounts on two other pipelines to China.

China has yet to comment on details of the deal. China’s state-owned Xinhua News Agency, reporting on bilateral meetings, did not specifically mention the pipeline, though it reported that the two countries signed more than 20 cooperation agreements, including in the field of energy.

Miller’s comments leave several questions about Power of Siberia 2 unanswered. The price China pays for the gas hasn’t been decided, although it will be lower than what Gazprom currently charges customers in Europe, Miller said, according to the reports.

It also isn’t clear whether China can buy flexible volumes from the pipeline or if it will have to purchase its full capacity. In addition, no timeline was given for construction or for the start of deliveries. Financial details are also still unclear.

Still, if the three gas agreements materialize, Russia’s eastbound export flows will jump to more than 100 billion cubic meters per year, cementing it as the largest pipeline-gas supplier to China.

Gazprom needs the Asian nation to prop up its exports after all but losing Europe, where it sold as much as 150 billion cubic meters a year of pipeline gas before the full-scale invasion of Ukraine. Now the Russian producer exports roughly a 10th of those volumes to a handful of buyers in the region, including Hungary and Slovakia.

Power of Siberia 2 would receive gas from the same fields that used to feed the European market, further underscoring Gazprom’s plan to pivot to the east.

Gazprom needs the pivot as the European Union considers a plan to ban Russian gas supplies under short-term contracts from June 17, 2026 at the latest, with an exemption for landlocked countries such as Hungary and Slovakia. A ban on shipments under existing longer-term deals would take effect by the end of 2027.

Putin is visiting Beijing for a major military parade that marks the 80th anniversary of World War II’s end. It is a return favor after Xi made a trip to Moscow earlier this year for a similar event remembering Russia’s triumph over the Nazis. Chinese troops took part in the May 9 parade on Red Square, forming the largest foreign contingent.