Russia and China Sign Major Deal for New Gas Pipeline

(Bloomberg) -- Russia’s Gazprom PJSC signed a legally binding agreement to build the Power of Siberia 2 gas pipeline to China via Mongolia and agreed to expand deliveries via two other routes. 

The gas producer is set to ship as much as 50 billion cubic meters a year via the Power of Siberia 2 for 30 years, Russian news wires reported, citing Chief Executive Officer Alexey Miller in Beijing. The price for the fuel will be lower than what Gazprom currently charges customers in Europe, Miller said according to the reports.  

By reaching an agreement for the new pipeline, Gazprom aims to expand its role as a key pipeline gas supplier to the Asian nation and partially replace lower European deliveries following the invasion in Ukraine.

The producer agreed to raise flows to China via the existing Power of Siberia route by another 6 billion cubic meters a year, according to the reports. Its current annual capacity is 38 billion cubic meters.

Flows via the future Far Eastern link to China, earmarked to start in 2027, will also be above the initially planned 10 billion cubic meters a year, according to the reports. 

(Updates throughout with new details.)

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