Russia is set to significantly increase its gas exports to China, potentially shaking the global liquefied natural gas (LNG) market and squeezing out US suppliers. According to a report by Bloomberg, Moscow’s announcement of expanded pipeline gas exports to China could result in the country doubling its deliveries to its Asian neighbor by the 2030s.
During a visit to China, Russian President Vladimir Putin confirmed that Moscow and Beijing had reached a consensus on a major new pipeline across Mongolia, which would significantly boost existing supplies. The proposed Power of Siberia 2 pipeline is expected to be operational by 2030 and, combined with other supply increases, could displace up to half of the over 40 million tons of LNG China currently imports each year, including from the US.
This development is seen as a signal from Beijing to Washington that it does not need US LNG for long-term growth, particularly as relations between the two countries continue to deteriorate. China appears to be comfortable with deeper reliance on Russian supplies, which are expected to cover 20% of its gas demand by the early 2030s, up from around 10% today.
The move is also seen as a response to US sanctions, with China recently receiving its first shipment from Russia’s Arctic LNG 2 project despite these restrictions. Russian officials have accused Western governments of prioritizing geopolitics over fair competition, pointing to the freezing of Russian sovereign assets and attempts to curtail its energy exports through economic restrictions.
The increased reliance on Russian gas supplies is likely to have significant implications for the global LNG market, with analysts warning that it could turn the market “on its head.” For LNG projects still in development, this could be a major setback, according to Wall Street research and brokerage firm AB Bernstein.
As Russia seeks to expand its energy exports, it is increasingly looking to more dependable customers, particularly for pipeline gas, which requires heavy infrastructure investment and long-term cooperation. The development of the Power of Siberia 2 pipeline is a key part of this strategy, and its completion is likely to have far-reaching consequences for the global energy market.
