Russia’s full-scale invasion of Ukraine injected new urgency into the Kremlin’s push to reduce dependence on European buyers, after Putin’s failed gamble to weaponize gas supplies did not coerce Europe into abandoning Ukraine. With limited alternatives for West Siberian gas, geography, geopolitics, and market size point squarely to China.
Years of negotiations over the Russia–Mongolia–China Power of Siberia 2 pipeline culminated in a splashy memorandum of understanding (MOU) signed during Putin’s visit to China. Yet the obstacles to realizing what Gazprom’s Alexei Miller recently described as “the world’s biggest and most capital-intensive gas project” have only multiplied over the past three and a half years.
This geopolitical theater, however, should not distract the United States and Europe from a far more urgent priority: curbing Russian evasion of liquefied natural gas (LNG) sanctions and placing additional sanctions on remaining projects and volumes. Every loophole leaks funds that sustain Russia’s daily atrocities in Ukraine.
The Power of Siberia 2 won’t outpower economics
The potential economic benefits Russia aims to achieve through the gas deal remain highly uncertain. China’s gas demand is tapering, and long-term pipeline contracts lack the fungibility of LNG, which can be shipped globally. Most importantly, Russia’s war spending has drained its capacity to fund large non-military projects. Moscow needs this deal far more than Beijing, giving China the ultimate upper hand in dictating terms. Unsurprisingly, the MOU omitted timelines, budgets, and details on who would finance the pipeline. Moreover, even if Power of Siberia 2 comes online, Its full 50 bcm capacity would cover less than half of the piped exports Russia has lost through its self-inflicted gas cutoff to Europe.
That said, these are unprecedented times in energy security, and projects have advanced at record speed when fueled by geopolitical ambition. Should China pursue an aggressive energy-hungry artificial intelligence (AI) strategy, discounted Russian fuel could balance and complement robust renewable energy growth. For Beijing, this “optionality bonus” comes at little cost; for Moscow, however, the financial upside would remain meager—undercut by steep discounts, unfavorable loans, and flexible purchase terms shaped by China’s tough negotiating position. The only viable path forward would be if the project proved overwhelmingly beneficial for Beijing, with Russia motivated simply to avoid flaring or venting stranded gas.
This Pyrrhic MOU posturing is strategically timed: a challenge to the West’s resolve to apply additional pressure on Russia amid US efforts to broker a lasting peace, ongoing US–China trade negotiations, and the North Korea-China-Russia meeting.
New gas pipelines: A mirage while Russian LNG ships across the world
While this public relations stunt grabbed headlines, Russian liquefied natural gas and Russia’s efforts to triple exports in the next five years—not another empty pipeline—remains the financial lever for aggression and geopolitical leverage that calls for urgent measures. The Arctic LNG 2 sanctions have been a case study in effective sanctions statecraft: slowing development, delaying exports by at least a year, and adding significant costs to Russia’s ambitions to expand its LNG market. But sanctions are only as strong as their enforcement. History makes clear that Russia will inevitably resort to evasion, which is why every sanctions package must be followed by a crackdown and, if necessary, escalation through secondary sanctions.
Response from the West is crucial
China and Russia aim to sell the deal—and the alliance of aggressors it represents—as a decline of Western relevance and power; however, the United States and Europe have smart options on how to respond. The immediate potency of sanctions on Russia’s crumbling economy don’t require $400 billion in investments and decades to complete, unlike Power of Siberia 2. Sanctioning the Arctic 2 LNG exports to China and enforcing existing vessel and project sanctions, sanctioning Russian oil, and cracking down on parts and chemicals essential for the industry is precisely the kind of response China and Russia are hoping the United States will not deploy. Such a bold response would create leverage in establishing a just peace in Ukraine by choking off already dwindling funding for Russia’s aggression and forge transparency around global LNG trade, whether it’s for carbon accounting, maritime safety, or sanction compliance.
The United States and Europe hold the economic leverage. The question is: will they deploy the full pressure campaign needed to forge a safer, more energy-secure, and resilient world—or allow the China-Russia authoritarian narrative of Western decline to prevail?
Olga Khakova is a deputy director at the Global Energy Center
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