Russia has secured agreement to build a colossal natural gas pipeline through Siberia and Mongolia to feed China’s insatiable demand, a deal that threatens to redraw the global energy map — and sideline a chunk of seaborne LNG trade in the process.
Dubbed Power of Siberia 2, the Gazprom pipeline will have a capacity of up to 50bn cu m annually, rivalling the Nord Stream lines that once linked Russia with Europe before the invasion of Ukraine severed those ties. Additionally, the first Power of Siberia pipeline, from Siberia to China, transports about 38bn cu m a year and could be increased to 44bn cu m.
For Moscow, the pipeline cements a pivot away from European buyers; for Beijing, it guarantees long-term energy security at a discount.
Shipping players, however, are watching warily. A landlocked artery of this scale could siphon demand from the global LNG carrier fleet, which has relied heavily on China’s voracious appetite in recent years. Analysts warn that while Chinese LNG imports will continue, pipeline gas could increasingly crowd out long-haul seaborne supply from the likes of Qatar, the US, and Australia.
The potential expansions of around 58bn cu m represent approximately 10% of global LNG volume today, and 6-7% of expected 2030 volumes, according to analysis by SEB, a Swedish investment bank, which views yesterday’s big energy pact in Beijing as a negative for the long-term fundamentals in LNG shipping.
